LONDON, Oct 14 — The British pound slid against the euro and dollar today, the start of a pivotal week for Britain and the European Union to strike a Brexit deal.
European stock markets also retreated as weak Chinese data offset a partial trade deal between China and the United States, analysts said.
Asian investors had earlier today saluted the trade deal, sending regional equity markets rallying, though observers were sceptical about the overall significance of the agreement.
Official data meanwhile showed Chinese imports and exports fell more than forecast in September, as US tariffs and cooling demand at home and abroad hit trade in the world’s second largest economy.
The figures weighed heavily on the oil market, with crude futures slumping two per cent. They had surged Friday, fuelled by a blast on an Iranian tanker and news of the US-China deal.
“Although the US and China made some progress late last week and President Trump suspended tariffs due to come in in mid-October, the damage from the existing trade restrictions is being felt,” noted Fiona Cincotta, senior market analyst at City Index trading group.
She added: “The pound has dropped like a stone overnight after Brexit negotiations didn’t lead to any significant progress over the weekend.”
Sterling rallied late last week after British Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar said after meeting that they could see a “pathway” to reaching a Brexit deal.
But European officials yesterday said obstacles remained on how to manage trade and customs between EU-member Ireland and Northern Ireland, which is a part of the United Kingdom.
Time is running out to sign off on any deal at an October 17-18 European Union summit, the last such meeting before Britain’s scheduled departure from the European Union at the end of the month.
Sterling “has given back some of last week’s major gains as traders are less hopeful about the prospect of a Brexit deal being reached”, said David Madden, analyst at CMC Markets UK.
“The mood is a little less hopeful that some sort of arrangement will be struck. On Friday, UK banks, like RBS, Lloyds plus Barclays all made sizeable gains, but... they are all in the red” in midday deals.
Key figures around 1100 GMT
Pound/dollar: DOWN at US$1.2559 from US$1.2645 at 2050 GMT on Friday
Euro/pound: UP at 87.81 pence from 87.26 pence
Euro/dollar: DOWN at US$1.1029 from US$1.1035
Dollar/yen: DOWN at 108.17 yen from 108.39 yen
London — FTSE 100: DOWN 0.5 per cent at 7,207.85 points
Paris — CAC 40: DOWN 0.7 per cent at 5,623.94
Frankfurt — DAX 30: DOWN 0.6 per cent at 12,438.63
EURO STOXX 50: DOWN 0.7 per cent at 3,544.79
Hong Kong — Hang Seng: UP 0.8 per cent at 26,521.85 (close)
Shanghai — Composite: UP 1.2 per cent at 3,007.88 (close)
Tokyo — Nikkei 225: Closed for a public holiday
New York — Dow: UP 1.2 per cent at 26,816.59 (close)
Brent North Sea crude: DOWN 2.0 per cent at US$59.29 per barrel
West Texas Intermediate: DOWN 2.2 per cent at US$53.57 per barrel — AFP
