20/06/2018 08:31 AST

The pound dropped to a seven-month low against the dollar after UK Prime Minister Theresa May lost a vote on her Brexit legislation in the House of Lords.

Sterling fell for the second day versus the greenback as market focus turns to the another vote on Wednesday, this time in the House of Commons. Lawmakers in the un-elected upper house backed an amendment late Monday to ensure a “meaningful vote” for Parliament on any deal with the European Union. The vote in the Commons could further determine the outcome of Brexit talks.

“The lack of ‘sweeping power’ for Brexiteer ministers adds to the uncertainty,” said Andreas Steno Larsen, a global currency strategist at Nordea Bank AB. “The lack of clarity will continue to postpone the eventual sterling comeback. We stay negative toward the pound over the next three months.” The pound declined as much as 0.3 per cent to $1.3200, its lowest level since November. It was little changed against the euro at 87.70 pence. Yields on 10-year gilts fell five basis points to 1.27 per cent. They had earlier touched 1.26 per cent, the lowest level in more than two weeks.

Growing doubts over the prospect of tighter monetary policy also weighed on the British currency. Less than 55 per cent of analysts surveyed by Bloomberg expect the Bank of England to raise interest rates in August, down from 60 per cent in a similar poll in May. Money markets are currently pricing in a 47 per cent chance of a 25-basis-point hike in August, down from 55 per cent at the start of last week.

BoE policy makers will review policy this Thursday and while all 44 analysts surveyed by Bloomberg expect them to leave rates unchanged, the meeting may provide signals on future policy direction.

“As long as the Brexit negotiation is just a risk factor, then Bank of England will instead look for signs of whether the uncertainty spills over to weakness in key figures. But we don’t believe in an August hike,” Nordea’s Larsen said.

Gulf News

Ticker Price Volume
DSI 0.37 0
SABIC 119.00 3,097,278
SAICO 11.48 1,245,614
STC 80.90 227,141
ARCCO 23.60 285,754
BURUJ 24.50 139,049
ALMARAI 45.00 124,248
US Dollar 1.00
Saudi Riyal 3.75
Derham Emirati 3.67
Qatari Riyal 3.67
Kuwaiti Dinar 0.30
Bahraini Dinar 0.38
Omani Riyal 0.39
Euro 0.88
British Pound 0.77
Japanese Yen 113.21
Pound regains ground as Brexit storm rages


The pound rebounded against the dollar on Friday, a day after a severe shellacking, as some investors were willing to bet on British Prime Minister Theresa May getting a controversial Brexit draft de

Gulf News

Pound volatility surges as traders look to next Brexit hurdle


Volatility in the pound jumped as traders looked ahead to the next hurdle on the Brexit path even if a draft deal is signed off by Prime Minister Theresa May’s senior ministers.


Gulf News

Dollar hits 16-month high; Brexit fears knock sterling


The dollar rallied to a 16-month high on Monday as investors positioned for a Federal Reserve interest rate rise next month and concern about political risks in Europe put pressure on the euro and th

Gulf News

Pound sceptics turn believers


Even fund managers who were once shunning the pound are now betting on a rally as the UK inches toward a Brexit divorce deal. Allianz Global Investors, which has been consistently short the pound si

Gulf News

Markets to shrug off yuan breaking 7, says China fund manager


A top-performing China bond fund manager says markets won’t be roiled even if the yuan weakens past 7 per dollar by year end as the country’s monetary policy increasingly diverges from the US.

Gulf Times