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Pound falls on Brexit fears as Article 50 looms

Sterling drops to eight-week low against the dollar as MPs clear the way for Theresa May to trigger Article 50.

 
Pound falls on Brexit fears as Article 50 looms

The pound has fallen to an eight-week low against the dollar after MPs overturned House of Lords amendments to Theresa May's Brexit bill, clearing the way for the prime minister to trigger Article 50.

Sterling dropped 0.7% to $1.213, giving up all the gains made in yesterday's resilient performance after Scottish first minister Nicola Sturgeon called for a second independence referendum.

'The pound has taken a sharp drop in early Tuesday trading,' said Kathleen Brooks, research director at City Index.

'In fairness liquidity has been thin, however it suggests the reality of the UK's divorce from Europe and two years of horse trading to agree deals is beginning to spook the foreign exchange market.'

'Delays to the process have been viewed as a negative for sterling,' added Alexandra Russell-Oliver, currency markets analyst at Caxton FX. 'However, there are still significant questions about what Brexit will look like and what the implications will be, and the pound will stay vulnerable until we get greater clarity.'

The pound was also coming under pressure from the dollar's strength, ahead of the Federal Reserve's meeting this week, expected to produce an interest rate rise.

Investors believe a hike this week is a certainty, and are pricing in more than three rises this year.

But the pound's fall did little to support the FTSE 100, which edged just nine points higher to 7,376.

Prudential (PRU) was the biggest riser, up 3% at £17.16 as the insurer unveiled a £4.3 billion profit for 2016, ahead of investor expectations.

Retail stocks and banks meanwhile came under pressure. Marks and Spencer (MKS) was the biggest FTSE 100 faller, down 2.3% at 330.1p, while Next (NXT) was down 1.4% at £39.13.

Among the banks, Royal Bank of Scotland (RBS) was down 1.9% at 236.8p and Lloyds (LLOY) fell 1.6% to 67.5p.

On the FTSE 250, SIG (SHI) was the biggest riser, up 9% at 116.8p as the builder materials supplier named a new chief executive and outlined plans to turn around performance of the business.

Meinie Oldersma will join from industrial products distributor Brammer to head up the group, which plans to sell assets and review costs in a bid for recovery.

The company also cut its dividend to 3.66p for 2016, down from 4.6p the previous year.

Peel Hunt analyst Clyde Lewis kept the stock as a 'hold' following the news. 'While there have been some asset disposals, slowing of capital expenditure and rebasing of the dividend to help reduce gearing, we leave our profit forecasts unchanged at this stage,' he said.

'The news of a fresh, experienced management team to refocus the business should be taken well, but we lave the shares on our watch list for now.'

2 comments so far. Why not have your say?

Alan Tonks

Mar 14, 2017 at 17:30

Well here we go again, Brexit the manipulators Golden Goose, sickening!!

report this

an elder one

Mar 14, 2017 at 21:34

Indeed; a monstrous regiment of .....

report this

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