Resignation and DUP clash weighs down pound

Resignation and DUP clash weighs down pound
Jo Johnson

By Eamon Quinn

Sterling stumbled yesterday as UK transport minister Jo Johnson resigned, saying he wants a new Brexit referendum, and the DUP clashed with prime minister Theresa May over potential plans for the Border.

Against the euro, it fell about 0.3% to 87.25p and traded at $1.2977.

However, The Ftse-100 index which tends to gain when the UK currency weakens, was weighed down with most other stock- markets over fears about the outlook for the world economy.

The Iseq Overall index of Irish shares retreated by almost 0.5%.

The resignation of her transport minister, who is Boris Johnson’s brother but who had nonetheless voted in 2016 for the UK to remain in the EU, may increase the difficulties for May in getting any Brexit agreement through the Commons.

“The week has passed without further progress on a Brexit deal, and the afternoon has become more interesting as Jo Johnson resigns from the government, calling for a second referendum.

“Even if some sort of deal emerges soon, it will still have to clear parliament, and it is by no means certain that such an outcome will transpire,” said Chris Beauchamp, chief market analyst at online broker IG.

Sterling will take its cue next week from UK economic data but “the main story is still the uncertain fate of the UK’s relationship with Europe”, said Beauchamp.

Fiona Cincotta, senior market analyst at City Index, said the Ftse-100 stocks failed to tap a potential boost from a weaker sterling.

“Brexit optimism which had buoyed the pound over recent sessions was starting to run dry by Friday.

“After a week of rumours and reports that a Brexit deal was just days away, pound traders now want to see evidence. Until there is something more substantial to go on, the pound could remain under pressure,” she said. Falling oil prices added to fears about the world economy.

A selloff in tech stocks added to the fall for US stocks. After falling 62c in London, the price of Brent crude just about kept above $70.

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