The pound firmed against the dollar and euro yesterday as the European Union prepared to grant a further delay to Brexit, averting the prospect of Britain departing the bloc next week without a deal.
The prospect of another delay had initially hit sterling, which briefly dropped as low as $1.2841 on Wednesday in Asian trade before bouncing back to $1.2890 around 1330 GMT, up from late in New York on Tuesday.
The pound is experiencing volatility on every Brexit twist and turn. Earlier this week, the unit reached five-month highs above $1.30 on increasing hopes that a painful ‘no-deal’ Brexit divorce would be averted.
“The prospect of a ‘no-deal’ outcome appears to be miniscule, which explains why the pound has maintained most... gains,” David Madden, analyst at CMC Markets UK, said yesterday.
In stock market trading, London’s benchmark FTSE 100 index was meanwhile up 0.3 per cent, while eurozone equities were mixed.
The EU is set to grant another Brexit extension after British MPs on Tuesday rejected Prime Minister Boris Johnson’s bid to force his divorce deal through Parliament this week.
European Council President Donald Tusk has recommended that the EU’s 27 other member states grant an extension, likely until the end of January.
In the meantime, the UK could hold a general election aimed at ending the Brexit deadlock, according to analysts.
Elsewhere yesterday, Shanghai’s main stocks index closed down 0.4 per cent and Hong Kong lost 0.8 percent, with traders keeping tabs on reactions to a Financial Times report saying China was drawing up a plan to remove the city’s beleaguered chief executive after nearly five months of pro-democracy unrest.
In commodities trading, oil prices slid after data indicated US stockpiles increased again last week, reinforcing worries about weak crude demand growth as the world economy slows.
On the corporate front, shares in French carmaker PSA jumped 3.3 per cent after the company said healthy demand for upmarket models helped it resist a slowdown in the global automotive market.
The maker of Peugeot, Citroen, DS, Opel and Vauxhall vehicles announced a one-percent gain in third-quarter sales to 15.6 billion euros ($17.4 billion).
Wall Street opened mixed, with the Dow adding 0.1 per cent in the first minute of trading.
Shares in Boeing climbed 1.8 percent despite reporting that third-quarter profits fell by half to $1.2 billion as it said it expects to get regulatory approval this year to return the grounded 737 MAX to service.
“Dow component Boeing’s profit miss is being shrugged off as the company stuck to its plan to return the 737 MAX to service” by the end of the fourth quarter, said analysts at Charles Schwab brokerage.