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Pound strikes five-month peak above $1.30

Prime Minister Boris Johnson suffered a fresh setback in getting his Brexit plan approved by lawmakers

The pound hit a fresh five-month peak above $1.30 Monday on renewed Brexit optimism after Prime Minister Boris Johnson requested another extension to Britain’s scheduled departure from the European Union.

At about 1230 GMT, the pound reached the highest level since May at $1.3013.

It pulled back after the speaker of the House of Commons refused to hold another vote on Johnson’s Brexit plan on Monday, and dipped lower.

“As should come as little surprise to those who follow John Bercow, the speaker of the house has announced that there will be no meaningful Brexit vote today,” said David Cheetham, chief market analyst at XTB online trading firm.

Parliamentary rules prohibit repeat votes on the same measure.

“However, he was also keen to state that it was legitimate for the government to introduce its EU withdrawal bill and as such we can expect the key vote to take place tomorrow,” he added.

“There is a growing expectation that this bill will pass tomorrow and therefore we could be set for further upside in the pound,” said Cheetham.

Johnson attempted Monday to again to push his EU divorce deal through parliament and avoid the political damage of delaying Brexit beyond next week.

– Brexit extension ‘more likely’ –

“Stock markets are in positive territory as traders are less fearful about the prospect of a no-deal Brexit,” said market analyst David Madden at CMC Markets UK.

Instead of backing Johnson’s Brexit plan over the weekend, lawmakers mandated the prime minister to break his promise and send a letter to Brussels asking for more time.

“The main driver (for the pound) is hope of a Brexit extension being more likely, which could result in a better exit deal potentially to be negotiated than is currently on offer,” said Accendo Markets trader Samuel Springett.

The pound had already struck five-month highs last week on optimism over Johnson’s Brexit agreement with Brussels.

The option of extending the three-and-a-half year crisis past the October 31 Brexit deadline is now in the hands of the 27 other EU member states.

– Boeing selloff continues –

Elsewhere, Asian equity markets mostly rose but there was little major movement in reaction to China’s top trade negotiator Liu He saying at the weekend that Beijing and Washington had made “substantial progress” towards wrapping up a partial trade deal announced earlier this month.

The deal offered China a temporary reprieve from tariffs planned for mid-October, while Beijing said it would hike purchases of US agricultural goods.

But it did not roll back any of the duties already imposed on hundreds of billions of dollars in exports to the US, nor address another round of levies due in December.

On Wall Street, the main indices moved higher despite Boeing shares tumbling again on doubts over its handling of the 737 MAX crisis after US aviation regulators criticised it for withholding key documents for months.

Both UBS and Credit Suisse downgraded the company following Friday’s statement by the Federal Aviation Administration that called Boeing’s handling of the documents “disappointing.”

Shares of Boeing were down 3.8 percent in late morning trading, after having fallen by 6.8 percent on Friday.

– Key figures around 1530 GMT –

Pound/dollar: DOWN at $1.2979 from $1.2984 at 2100 GMT on Friday

Euro/pound: DOWN at 85.84 pence from 86.00 pence

Euro/dollar: DOWN at $1.1142 from $1.1167

Dollar/yen: UP at 108.47 yen from 108.45 yen

London – FTSE 100: UP 0.2 percent at 7,163.64 points (close)

Paris – CAC 40: UP 0.2 percent at 5,648.35 (close)

Frankfurt – DAX 30: UP 0.9 percent at 12,747.96 (close)

EURO STOXX 50: UP 0.7 percent at 3,603.74 (close)

New York – Dow: UP 0.2 percent at 26,809.36

Tokyo – Nikkei 225: UP 0.3 percent at 22,548.90 (close)

Hong Kong – Hang Seng: UP 0.1 percent at 26,740.24 (close)

Shanghai – Composite: UP 0.1 percent at 2,939.62 (close)

Brent North Sea crude: DOWN 1.3 percent at $58.65 per barrel

West Texas Intermediate: DOWN 1.1 percent at $53.19

AFP

Oct 21, 2019

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