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Pound jumps as easing political worries in Europe lift shares

04.09.2019 13:02:39

The Britsh Pound bounced from a three-year low on Wednesday after a parliamentary vote raised the possibility of another delay to Brexit; an easing of political risks in Italy also pushed stocks higher.

Global stocks rose 0.4% by 0821 GMT as Europe rallied 1.1%. This was after a positive session in Asia following a report that showed China’s service sector accelerated despite general economic headwinds.

Reports that Hong Kong will announce the withdrawal of the Extradition bill that threw the Chinese-ruled city into its worst crisis, also caused relief.

British lawmakers prevailed over Boris Johnson in a bid to prevent him from taking Britain out of the EU without a divorce agreement on Tuesday. This prompted the prime minister to announce that he would immediately push for a snap election.

On Wednesday, they will seek to pass a law forcing Johnson to ask the European Union to delay Brexit until January 31 unless he has an exit deal approved by parliament beforehand.

UK development lifted the Pound 0.56% to $1.2155 after sliding on Tuesday to its lowest since October 2016.

“The road from here is likely to be very tricky, especially if PM Boris Johnson takes the path toward a snap election,” said Hussein Sayed, Chief Market Strategist at FXTM.

Elsewhere in the currency markets, the Dollar index against a basket of the 6 major currencies stood at 98.803 after rising overnight to 99.370 -- its highest level since May 2017.

The index lost ground on Tuesday after data showed that the U.S. manufacturing sector contracted in August for the first time since 2016. This is a reading that has cemented expectations of further policy easing by the Federal Reserve.

The Euro rose to $1.0987 after sliding to a 28-month low of $1.0926 overnight as investors braced for a potential interest rate cut by the European Central Bank next week.

 

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