Pound leaped as Britain thrown into uncertainty by shock vote

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As Prime Minister Theresa May lost her majority in Britain’s general election, pound dives two percent on Friday, fueling political uncertainty just days before the start of Brexit talks.

To boost her party’s hold over Westminster and give her a stronger hand in talks with EU leaders over the country’s detachment from the bloc May had called the snap vote in a bid.

Jeremy Corbyn’s Labor Party cuts the ruling Conservatives’ lead, leaving the country with a hung parliament and political instability for the second time in seven years.

After the confirmation that the Conservatives had lost their majority pound dived from $1.2959 to $1.2674. It also sank almost two percent against the euro.

Weaker pound helps international firms listed on the index and London’s FTSE 100 opened 0.7 percent higher.

“A hung parliament is the worst outcome from a markets perspective as it creates another layer of uncertainty ahead of the Brexit negotiations and chips away at what is already a short timeline to secure a deal for Britain.” London based senior market analyst at OANDA, Craig Erlam.

The result will throw Britain once again into disturbance less than a year after the country’s decision to leave the EU, which led the pound to collapse about 15 percent against the dollar between June and October 2016.

However, Minori Uchida, head of global market research at Bank of Tokyo-Mitsubishi UFJ, told AFP: “May’s setback could lead to a soft Brexit, which is not so bad for the British economy in the long run”

While the pound has come under fresh pressure, Asian stock markets were mostly higher as traders took the prospect of chaos in Britain in their stride.

Testimony from dismissed FBI boss James Comey that Donald Trump asked him to drop a probe into former national security adviser Mike Flynn had little effect his testimony was pretty forthright and genuinely questioned the president’s conduct,” said Greg McKenna, chief market strategist at Axi Trader.

“But it didn’t appear to have any fresh revelations which could increase the chances of the impeachment of President Trump.”

Singapore gained 0.4 percent Seoul was up 0.8 percent. Tokyo rose 0.5 percent, Shanghai added 0.3 percent while Sydney was flat.

However, Hong Kong dipped 0.1 percent a day after ending above 26,000 for the first time in almost two years.

According to Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney, told Bloomberg TV. “Even though we’re seeing higher sterling volatility, there’s even less prospect of that spilling into broader markets,” he said “This is still a little local difficulty rather than an event of global proportions.”

Paris rose 0.3 percent and Frankfurt was flat.

– Key figures around 0810 GMT –

Pound/dollar: DOWN at $1.2674 from $1.2959

London – FTSE 100: UP 0.6 percent at 7,503.14

Tokyo – Nikkei 225: UP 0.5 percent at 20,013.26 (close)

Hong Kong – Hang Seng: DOWN 0.1 percent at 26,030.29 (close)

Shanghai – Composite: UP 0.3 percent at 3,158.40 (close)

Euro/dollar: UP at $1.1200 from $1.1211

Dollar/yen: UP at 110.46 yen from 109.81 yen

Oil – West Texas Intermediate: DOWN four cents at $45.60 per barrel

Oil – Brent North Sea: DOWN five cents at $47.81 per barrel

New York – Dow: UP less than 0.1 percent at 21,182.53 (close).

Source: AFP

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