April 2, 2019: The pound dropped versus the dollar and euro on Tuesday after British MPs once again rejected a series of alternative options to Prime Minister Theresa May's EU divorce deal.

After Monday's voting outcomes, the European Union's chief negotiator Michel Barnier warned it is “day after day more likely” that Britain will crash out of the bloc next week without an orderly withdrawal agreement.

Nearing midday in London, the pound was down about 0.3 percent versus both the dollar and euro.

“European markets are mixed… but a weaker pound has helped the FTSE 100 to rise above the gloom,” noted Chris Beauchamp, chief market analyst at IG trading group.

The benchmark London FTSE 100 index features several multinationals who earn vast sums in dollars.

“As ever, the pound is the clearest gauge of the market's view on continued (Brexit) uncertainty and is halfheartedly losing ground against the euro and the dollar,” said Fiona Cincotta, senior market analyst at City Index.

“Parliamentary disarray is also hitting the euro because a disorderly Brexit has the potential to affect European companies trading with the UK.

“Of the European gauges, the (Frankfurt) DAX is possibly in the worst position to withstand a disorderly Brexit as Germany is already flirting with a recession and if its exports of cars and car parts to the UK are affected it would add to problems already created by the slowdown of trade with China,” Cincotta added in a client note.

In another downbeat note for the economic outlook, the World Trade Organization forecast Tuesday that global trade growth would be lower in 2019 than last year.

In its main annual forecast, the WTO revised its prediction for this year down from 3.7 percent to 2.6 percent, citing widespread “tensions” and economic uncertainty, including Brexit and tariffs between the US and China.

US-China trade talks

World stock markets mostly rose Tuesday but gains were tempered by profit-taking after a recent rally, though investors remain optimistic over China-US trade talks and the prospect of no hike to American borrowing costs.

A forecast-beating factory report out of Beijing — which spurred buying across the region Monday — was followed by a similarly positive US reading, tempering worries about the outlook for the world's biggest and most crucial economies.

Traders are now awaiting the start of the next round of top-level trade talks in Washington, with China and the US noting progress in a meeting last week in Beijing.

A series of olive branch measures from the Chinese side has lifted hopes the two will eventually reach a deal to end their tariffs row, which dragged on equities at the end of 2018.

This week also sees the release of US March jobs data, which are closely watched for an idea about the state of the economy, with the Federal Reserve also using the figures to map its path for monetary policy.

Key figures around 1030 GMT

• Pound/dollar: DOWN at $1.3050 from $1.3103 at 2100 GMT on Monday
• Euro/pound: UP at 85.84 pence from 85.58 pence
• Euro/dollar: DOWN at $1.1202 from $1.1213
• Dollar/yen: UP at 111.37 yen from 111.35 yen
• London – FTSE 100: UP 0.7 percent at 7,365.23 points
• Frankfurt – DAX 30: UP 0.2 percent at 11,699.74
• Paris – CAC 40: UP 0.2 percent at 5,413.94
• EURO STOXX 50: UP 0.1 percent at 3,389.02
• Tokyo – Nikkei 225: FLAT at 21,505.31 (close)
• Hong Kong – Hang Seng: UP 0.2 percent at 29,624.67 (close)
• Shanghai – Composite: UP 0.2 percent at 3,176.82 (close)
• New York – Dow: UP 1.3 percent at 26,258.42 (close)
• Oil – Brent Crude: UP 29 cents at $69.30 per barrel
• Oil – West Texas Intermediate: UP 50 cents at $62.09

(APP)

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