Business World

Thursday 20 June 2019

Sterling swings wildly after Theresa May's Brexit deal defeated in House of Commons

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)

Gavin McLoughlin/Bloomberg

The pound swung wildly on the back of the defeat of Theresa May’s Brexit deal in the House of Commons.

The currency dropped to its lowest level versus the euro all day, before recovering those losses in minutes and jumping further upward after Mrs May spoke in the House of Commons.

€1 hovered around the 89p level, breaking through to a 0.4pc gain for the day as a whole just after 8.20pm. The seeming indifference to the vote being lost is an indication that investors were expecting Mrs May’s defeat.

Analysts expect the currency to be volatile given the uncertainty that lies ahead.

This comes after sterling rose to a seven-week high yesterday afternoon following a report that some Eurosceptic MPs, members of the Conservative Party's European Research Group, could back Theresa May's proposed Brexit deal.

But it retreated shortly thereafter as the MPs moved to clarify their position ahead of tonight's vote on the deal in Westminster.

Gearoid Keegan from the treasury team at Investec Ireland said investors were also jittery after reports that some foreign exchange brokers were placing limits on the amount of sterling that can be bought and sold today.

The Iseq index of Irish shares was down 0.5pc ahead of the vote, with Paddy Power Betfair and Ryanair among stocks with significant UK exposure to fall.

Paddy Power lost almost 4pc while Ryanair lost 2.19pc.

US stocks declined as weak Chinese trade data fuelled concerns about slowing global growth.

The S&P 500 fell for a second session, led by technology shares, after slumping Chinese exports led to worries about the growing impact of the US-China trade war on worldwide growth.

"There are two macro events that continue to weigh on market perspective," said Frances Donald, head of macroeconomic strategy at Manulife Asset Management. "The first is where is global growth heading next, and weak Chinese trade data would suggest that global growth is certainly not bottomed as of yet.

"And the second issue is the persistence of the US government shutdown and how that muddies our perspective about what happens next."

Irish Independent

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