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Pound recovers as markets eye Brexit and Fed


The UK pound has reovered following the Brexit. PHOTO:AFP

London stocks rallied Wednesday and the pound rebounded from no-deal Brexit fears, while traders awaited the outcome of a Federal Reserve policy meeting and kept an eye on crunch trade talks between China and the United States.

British Prime Minister Theresa May on Tuesday won a mandate from UK lawmakers to try to renegotiate her Brexit deal with Brussels.

She is now hoping to unlock the impasse despite EU figures insisting that they will not budge.


“Both the pound and FTSE 100 are rising… as the markets digest yesterday’s parliamentary vote which saw MPs rejecting a no-deal Brexit but crucially backing an attempt to re-write the withdrawal agreement,” noted Joshua Mahony, senior market analyst at IG trading group.

The pound initially fell, however “because (the) vote leaves a no-deal Brexit on the table”, said Neil Wilson, chief market analyst at

Having comprehensively rejected the Brexit withdrawal agreement last month, British MPs late on Tuesday backed an amendment saying they would support the deal if its controversial “backstop” clause concerning the Irish border was removed.

Minori Uchida, Tokyo head of global markets research at MUFG Bank, said market players “are still thinking that a hard Brexit will be avoided in the end,” but added: “the optimism is groundless”.

“Hard Brexit risks are still here,” he told AFP.

With Britain otherwise on course for a chaotic exit from the bloc on March 29, May admitted she faces a formidable challenge convincing Brussels to re-open an accord that took 18 excruciating months to conclude.

And there was no sign that European leaders were prepared to remove the backstop in order to salvage the deal.

Fed decision
US stocks moved higher, with China, monetary policy and earnings in focus.

Analysts at Charles Schwab brokerage said markets are “digesting ongoing trade tensions between the US and China ahead of discussions in Washington and awaiting today’s monetary policy decision from the Fed.”

Meanwhile, earnings at Dow members Apple and Boeing, and data on private sector hiring all came in better than expected.

Traders are looking ahead to the end of the Federal Reserve’s latest policy meeting, with hopes for some guidance on its plans for US interest rates this year.

Wednesday sees also the start of high-level US-China trade talks, with Beijing’s top trade negotiator due to meet Donald Trump during the two-day gathering.

While markets have been supported by optimism over the talks in recent weeks, the US decision Monday to charge Chinese telecom titan Huawei on several counts of fraud and tech theft has muddied the waters.

Still, Treasury Secretary Steven Mnuchin insisted the two issues were not linked and said he saw the chance of a trade deal if China offered the right concessions.

“Some dealers have been sitting on their hands in advance of the meeting as a hopes aren’t overly high,” said CMC Markets analyst David Madden.

“Mnuchin… stated he expects ‘significant progress’ to be made, but given the strained relationship between the US and China over the Huawei situation, the trade talks might suffer.”

Shares in Apple rose 5.4 percent in late morning trading, while Boeing shares climbed 6.4 percent

– Key figures around 1630 GMT –
London – FTSE 100: UP 1.6 percent at 6,941.63 points (close)

Frankfurt – DAX 30: DOWN 0.3 percent at 11,181.66 (close)

Paris – CAC 40: UP 1.0 percent at 4,974.76 (close)

EURO STOXX 50: UP 0.1 percent at 3,156.57

New York – Dow: UP 1.3 percent at 24,904.83

Tokyo – Nikkei 225: DOWN 0.5 percent at 20,556.54 (close)

Hong Kong – Hang Seng: UP 0.4 percent at 27,642.85 (close)

Shanghai – Composite: DOWN 0.7 percent at 2,575.58 (close)

Pound/dollar: UP at $1.3072 from $1.3069 at 2130 GMT

Euro/pound: DOWN at 87.40 pence from 87.48 pence

Euro/dollar: DOWN at $1.1421 from $1.1435

Dollar/yen: UP at 109.59 yen from 109.34

Oil – Brent Crude: UP $1.22 at $62.54 per barrel

Oil – West Texas Intermediate: UP $1.43 at $54.74

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