CURRENCIES: British Pound Extends Skid As Brexit Plan Unravels, Intensifying Calls For May's Ouster
May 23 2019 - 8:42AM
Dow Jones News
By Mark DeCambre, MarketWatch
India's rupee slips against bucks after Modi election
victory
The British pound added to losses against major rivals on
Thursday, with some bears raising the remote possibility that U.K.
Prime Minister Theresa May's Brexit struggles could drag Britain's
currency to parity with the buck.
Most recently, sterling fell to $1.2641, compared with $1.2661
late Wednesday in New York, a decline of about 0.2%. The currency
is trading near its second-lowest level in 2019.
Losses for the pound have come amid a faltering, last-ditch
attempt by May to win support for her plan to exit from the
European Union, which has thus far led to the resignation on
Wednesday of Andrea Leadsom
(http://www.marketwatch.com/story/british-pound-sinks-as-uk-house-of-commons-leader-quits----underlining-mays-brexit-challenge-2019-05-22),
the House of Commons leader, who could also challenge the premier
for leadership.
The Brexit tussle comes as European Parliamentary elections that
begin in the U.K. and the Netherlands are under way, with results
expected to be announced Sunday.
Currency strategists say they expect more pressure on sterling,
with investors increasing bets that the pound will suffer further
losses as the threat of a disorderly Brexit is seen as increasing
-- bearish for British units, said Société Générale. Strategists at
the bank said a victory for Labour in the European elections for
the U.K., combined with a near-term ouster of May (as soon as
Friday), could see the pound test support level at $1.25.
"If the EU election result turns out to be a fiasco for the
Conservatives...there is little to stop cable [GBP/USD] from
retesting $1.2500," the strategists wrote.
May is expected to meet with her party's 1922 Committee
(https://www.parliament.uk/site-information/glossary/1922-committee-the-22/),
made up of all backbench Conservative members of parliament.
If the elections for European Parlaiment see the Brexit Party
get more votes than the mainline Conservative and Labour parties
combined, as seems likely, "then it's probably curtains for PM May.
In that case, the appalling Boris Johnson is tipped to take over as
PM and a 'no deal' Brexit becomes more likely. A disaster for the
pound," wrote Marshall Gittler, chief strategist at
currency-research firm ACLS Global.
The strategist implied that parity with dollars for sterling is
a possibility if the U.K.'s Brexit backdrop darkens. "Will we
finally see the long-awaited "pound parity party?" Stay
tuned!!"
More Modi
India's rupee weakened against the buck as Prime Minister
Narendra Modi, the nationalist leader of the BJP, or Bharatiya
Janata Party, secured a new term as the country's leader, according
to the official government tally.
The rupee traded at 69.9556 per dollar on Thursday, compared
with 69.6800 late Wednesday, off 0.4%. The victory for Modi is
viewed as setting the stage for more ambitious policies.
The country-specific exchange-traded iShares MSCI India ETF
(INDA)has climbed 17.9% since Modi assumed office May 26, 2014. The
S&P 500 index has climbed 50% over the same period, while the
Dow Jones Industrial Average has gained more than 55%.
(END) Dow Jones Newswires
May 23, 2019 08:27 ET (12:27 GMT)
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