LONDON MARKETS: Pound Plummets Ahead Of No-deal Brexit Vote As Boris Johnson Threatens Snap Election
September 03 2019 - 7:45AM
Dow Jones News
By Callum Keown
The pound plummeted to near three-year lows on Tuesday ahead of
a crucial day for Brexit in Parliament.
Sterling fell below $1.20 to its lowest level since October 2016
as British Prime Minister Boris Johnson threatened to call a
general election if MPs block a no-deal Brexit this evening.
The currency bounced back above $1.20 but was still trading down
for the day.
The pound's continued descent meant the internationally focused
FTSE 100 avoided the heavier losses felt by other European indexes,
sliding just 0.3%.
What's moving the markets?
Johnson has threatened a snap election if a group of rebel MPs
succeed in blocking a no-deal Brexit
(http://www.marketwatch.com/story/boris-johnson-urges-rebel-tories-not-to-chop-the-legs-with-brexit-delay-2019-09-02)
through a bill being put forward on Tuesday.
The heightened uncertainty caused stocks to open lower and the
prospect of an election led the pound to slide to lows of
$1.1960.
While traders fear a no-deal Brexit, which the Bank of England
said could see the pound crash to parity with the U.S. dollar, they
are also terrified of a government led by Jeremy Corbyn, the head
of the opposition Labour Party.
Neil Wilson, analyst at Markets.com, said: "We could feasibly
see $1.15 or even $1.10 in the coming weeks if traders decide to
move against the pound.
"Elections are never easy to call--the risk of Corbyn to U.K.
assets is probably greater than a no-deal Brexit, after all."
The election, if called, would take place on Oct. 14--just two
weeks before the scheduled
(http://www.marketwatch.com/story/british-pound-fells-further-pressure-drops-below-120-on-election-speculation-2019-09-03)date
for the UK to leave the European Union.
Michael Brown, Caxton FX analyst, said: "The outcome of a snap
election is difficult to predict. However, ensuing uncertainty in
the 5-6 week campaigning period should result in the pound
remaining under pressure."
Which stocks are active?
Travel and leisure stocks were hit on Tuesday as budget airline
EasyJet (EZJ.LN) fell 4% after being downgraded by Kepler Cheuvreux
from hold to reduce.
The Restaurant Group (RTN.LN) dropped 12.4% after posting heavy
losses in the wake of its takeover of Wagamama, the Asian-themed
fast-food chain. The company swung to a pretax loss of GBP87.7
million in the first half of 2019, compared with a GBP12.2 million
profit over the same period in the previous year.
British plumbing and heating distributor Ferguson (FERG.LN) rose
2.9% as it revealed plans to separate its U.K. operations and focus
on its U.S. business.
(END) Dow Jones Newswires
September 03, 2019 07:30 ET (11:30 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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