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Pound under pressure amid reports of Brexit split in cabinet – Business live

Discussion in 'Market News' started by Lily, Oct 17, 2016.

  1. Lily

    Lily Forum Member

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    Reports of cabinet split over Brexit strategy, and tensions with the Bank of England, alarm investors


    8.12am BST

    Kathleen Brooks of City Index confirms that those political tensions are weighing on the pound this morning.

    She points out that sterling has had a shocking few weeks -- even against countries whose finance minister are facing criminal charges:

    Although the Treasury has denied that Philip Hammond will quit his post, it doesn’t help to instil confidence in the pound.

    The British pound is down more than 5% so far this month vs. the US dollar; it is also weaker against every other G10 currency. To put this month’s fall into context, the pound is weaker against the majority of emerging market currencies, including the resurgent Mexican peso, and the Malaysian ringgit. The South African rand managed to eek out a gain vs. the pound, even thought its finance minister was recently hit with charges of criminal misconduct.

    In fact, the pound is starting to act like an emerging market currency, with volatile price swings, and no stabiliser to limit the selling pressure. Risks of a break up of the United Kingdom and further signs of tension in Downing Street over the Prime Minister’s handling of Brexit, are the chief concerns of the currency market right now, and until these issues go away the pound is likely to remain the market’s favourite whipping boy.

    8.05am BST

    Sterling has come under new pressure in early trading, amid reports of tensions at the heart of the UK government.

    The pound is bobbing below the $1.22 mark, hitting a low of $1.215, which is close to a 31-year low against the US dollar.

    Members of the Cabinet are said to be growing increasingly frustrated by Mr Hammond’s position on Brexit. One Cabinet source said he is “overly influenced by his Treasury officials who think it is a catastrophe that Britain voted to leave the EU”.

    Another source said: “He is arguing from a very Treasury point of view. He is arguing like an accountant seeing the risk of everything rather than the opportunity.”

    Monday's Telegraph front page:
    Hammond in Cabinet Brexit row#tomorrowspaperstoday #bbcpapers pic.twitter.com/Oep3E74oZo

    Monday's Times front page:
    Hammond clashes with Brexiteers on migrants#tomorrowspaperstoday #bbcpapers pic.twitter.com/WnPOVPBSvd

    Related: Mark Carney: Bank of England will not take policy instructions from politicians

    7.48am BST

    Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

    Britain’s exit from the EU looms over the City at the start of a busy week for investors.

    “There are plans in case the UK were to leave the single market without any kind of regulatory equivalence,” he said. “These plans may be set into motion early on if the uncertainty drags on for too long.”

    Related: Banks could move assets out of UK by 2017 if 'EU passport' is lost

    Monday's FT front page:
    Cabinet looks at paying billions to keep single-market access for City#tomorrowspaperstoday #bbcpapers pic.twitter.com/UwdXJSmZSH

    Related: UK faces growth slowdown as Brexit challenges hit

    Looking ahead, highlights include Eurozone CPI, US Empire State Manufacturing Index, US Industrial and Manufacturing Production

    Continue reading...
     

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