Pound steadies as London seeks new Brexit delay

A food seller holds a new polymer five-pound note at Whitecross Street Market in London September 13, 2016. — Reuters pic
A food seller holds a new polymer five-pound note at Whitecross Street Market in London September 13, 2016. — Reuters pic

LONDON, April 5 — The British pound steadied today after London requested another Brexit extension in the long-running saga, while global stocks mostly rose on hopes over China-US trade talks.

British Prime Minister Theresa May has asked the European Union to delay Britain’s departure until June 30, while the bloc itself suggested that it might be best to postpone the split for up to a year.

“In terms of market moves on this news, there’s not really been too much of note with the pound trading little changed as the dust settles,” noted XTB analyst David Cheetham.

“As far as most currency traders are concerned the chances of a no-deal remain remote — but at the same time a satisfactory outcome anytime soon also seems highly unlikely, and this is containing the pound in a fairly narrow trading range.”

May also told EU Council president Donald Tusk in a formal letter that Britain would start preparing for its participation in European Parliament elections in case it is still a member of the bloc when they begin on May 23.

Race against clock

The embattled premier is racing against the clock in a desperate bid to get her deal approved in time for an EU leaders’ summit in Brussels on Wednesday, when a formal decision on any extension will be made.

She is also holding a third day of talks with opposition Labour Party leader Jeremy Corbyn to find a way to avert a messy no-deal divorce.

The Brexit current deadline is April 12, which has already been pushed back once from March 29.

“The idea of a longer delay was something of a relief to sterling, given that currently the UK is set to leave the EU next Friday,” noted Spreadex analyst Connor Campbell.

In stock market deals, London and Paris each added 0.2 per cent on value, while Frankfurt ran out of steam heading into the weekend.

Asian equity indices mostly rose in holiday-thinned trade on hopes that China and the United States will hammer out a trade deal after both sides sounded notes of optimism.

With top negotiators from the world’s top two economies huddled down in Washington for three days of talks, there has been a growing sense they are close to an agreement to end a stand-off that battered global equities last year.

‘Looking good’ for talks

US President Donald Trump added to the sense of hope on Thursday when he said the two sides were nearing a successful conclusion.

“We will probably know over the next four weeks. It may take two weeks after that,” he told reporters after a meeting with Beijing’s top trade envoy and Vice Premier Liu He.

“It’s looking very good.”

Later Liu said they had “reached a new consensus on important issues”, according to China’s Xinhua. The news agency also reported that President Xi Jinping had called for the “early conclusion of negotiations”.

Both camps have been cautiously optimistic for months, but the last mile is proving to be the hardest as they tussle over whether and when Washington should remove the painful tariffs it imposed on Chinese goods last year.

Dealers are meanwhile awaiting crucial US non-farm payrolls data for an idea about the state of the world’s top economy.

“We are awaiting the latest labour market data from the US, a report that is arguably the most closely followed each month,” noted Oanda analyst Craig Erlam.

“It also comes after a dreadful month of job creation in February when only 20,000 were added.”

Key figures around 1145 GMT

Pound/dollar: DOWN at US$1.3071 from US$1.3077 at 2100 GMT on Thursday

Euro/pound: UP at 85.91 pence from 85.81 pence

Euro/dollar: UP at US$1.1228 from US$1.1221

Dollar/yen: UP at 111.70 yen from 111.66 yen

London — FTSE 100: UP 0.2 per cent at 7,414.04 points 

Frankfurt — DAX 30: FLAT at 11,984.16

Paris — CAC 40: UP 0.2 per cent at 5,475.11

EURO STOXX 50: UP 0.1 per cent at 3,444.55

Tokyo — Nikkei 225: UP 0.4 per cent at 21,807.50 (close)

Hong Kong — Hang Seng: Closed for a public holiday 

Shanghai — Composite: Closed for a public holiday

New York — Dow: UP 0.6 per cent at 26,384.63 (close)

Oil — Brent Crude: DOWN 16 cents at US$69.24 per barrel

Oil — West Texas Intermediate: UP two cents at US$62.12 — AFP