Sterling slumps on 'no-deal Brexit' worries; stocks dip

By Rodrigo Campos

 

FILE PHOTO: UK pound coins plunge into water coloured with the European Union flag colours in this illustration picture, October 26, 2017. REUTERS/Dado Ruvic

 

NEW YORK (Reuters) - The British pound touched its lowest level in over two years against the dollar after Prime Minister Boris Johnson said a hard divorce from the EU was in the cards, while stocks dipped globally with Wall Street backing off record highs.

 

The dollar index edged up and touched its highest since late May as markets counted down to a likely cut in U.S. interest rates this week, with much riding on whether the Federal Reserve signals more cuts will follow.

 

Sterling fell to a 28-month low of $1.2213 as Johnson's cabinet prepared the ground for a "no-deal" British exit from the European Union on Oct. 31, which many investors say would tip Britain into a recession and inject unwanted uncertainty into financial markets.

 

The pound was last trading at $1.2223, down 1.27% on the day.

 

"There is a realization the market had not fully priced the increased chances of a no-deal Brexit," said Claire Dissaux, head of global economics and strategy at Millenium Global Investments.

 

The dollar index rose 0.03%, with the euro up 0.17% to $1.1144.

 

The Japanese yen weakened 0.09% versus the greenback at 108.79 per dollar.

 

A stronger-than-expected U.S. gross domestic product report on Friday lead some investors to doubt whether the Fed will continue easing this year after its Wednesday meeting.

 

Interest rate futures are fully priced for a quarter-point rate cut from the Fed on Wednesday, with a 1-in-4 chance of a half-point move.

 

On Wall Street, Amazon and Facebook weighed down the S&P 500 while Apple rose a day ahead of earnings. Absent company news, the Fed remained as the main market catalyst.

 

"Apple's results will be a good read into trade and the situation with China and if Apple has a good number it would be a stabilizing force for the technology sector," said Craig Hodges, portfolio manager with Hodges Funds in Dallas, Texas.

 

The Dow Jones Industrial Average rose 28.9 points, or 0.11%, to 27,221.35, the S&P 500 lost 4.89 points, or 0.16%, to 3,020.97 and the Nasdaq Composite dropped 36.88 points, or 0.44%, to 8,293.33.

 

MSCI's gauge of stocks across the globe shed 0.16% and emerging market stocks lost 0.28%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.54% lower, while Japan's Nikkei lost 0.19%.

 

The pan-European STOXX 600 index earlier rose 0.03%.

 

Investors were also keeping an eye on U.S.-China trade talks. U.S. and Chinese negotiators meet in Shanghai this week for their first in-person talks since a G20 truce last month, but expectations for a breakthrough are low.

 

Oil futures meandered throughout the session but ended decidedly in the black as Fed easing expectations more than offset the reaction to "constructive" Iran talks over the weekend.

 

U.S. crude rose 1.51% to $57.05 per barrel and Brent was last at $63.89, up 0.68% on the day.

 

"Today's kickoff to some renewed trade negotiations between U.S. and China will likely inspire some modest price support," Jim Ritterbusch of Ritterbusch and Associates said in a note. "However, the mid-week Fed decision and associated commentary could prove to be this week's larger driver of oil pricing."

 

U.S. Treasury yields were lower across the board with investors focused on the widely expected interest rate cut by the Fed later this week.

 

"People say the Fed could go 50 basis points, but I think that's not going to happen," said Stan Shipley, fixed income strategist at Evercore ISI in New York. "The question is what they are going to say about future cuts."

 

Benchmark 10-year notes last rose 6/32 in price to yield 2.0598%, from 2.081% late on Friday.

 

The 30-year bond last rose 10/32 in price to yield 2.5871%, from 2.601% late on Friday.

 

Spot gold added 0.6% to $1,426.31 an ounce. U.S. gold futures gained 0.49% to $1,426.20 an ounce.

 

Copper rose 0.87% to $6,015.00 a tonne.

 

(Reporting by Rodrigo Campos; additional reporting by Olga Cotaga in London, Shreyashi Sanyal in Bengaluru and Kate Duguid, Stephanie Kelly & Gertrude Chavez-Dreyfuss in New York; Editing by Alistair Bell, Nick Zieminski and Susan Thomas)

 

-- © Copyright Reuters 2019-07-30

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This is obviously project fear. There is no conceivable downside to any form of Brexit, deal or no deal.

Watching the UK eat itself alive at behest of the proudly ignorant brings a tiny bit of humor to an otherwise dreary future.  Pollyanna eat your heart out.

Photo illustrates the age-old dilemma: If you drop coins in a toilet, is it worth putting your hands in the water to fetch them?

4 hours ago, brucec64 said:

This is obviously project fear. There is no conceivable downside to any form of Brexit, deal or no deal.

Unbelievable nonsense. The government's own experts have produced an analysis which is all very bad news.

11 minutes ago, flossie35 said:

Unbelievable nonsense. The government's own experts have produced an analysis which is all very bad news.

He was extracting the urine. The only answer Brexiteers have to the relentlessly bad financial news they are generating is the economy will, one day, 'bounce back'. When or for what reason is deliberately kept vague. Unbelievable.

A one way trade deal with the Caymans is very much alive and well as the collateral damage expats arrive home to take up residence on the streets ????

As we see in Thailand every day, optimism is very important to maintain morale in the face of preventable but unprevented catastrophes.

9 hours ago, brucec64 said:

This is obviously project fear. There is no conceivable downside to any form of Brexit, deal or no deal.

Hahahahahahahahahahaha

GBP the great British pound haha micky mouse money now. 

Congratulations buccaneering brexiters you have achieved what terrorist have been trying to do for years. 

6 minutes ago, phka said:

GBP the great British pound haha micky mouse money now. 

Congratulations buccaneering brexiters you have achieved what terrorist have been trying to do for years. 

Yes, I do recall Osama Bin Laden  stating that the reason for the bombing of the WTC was for the Thai Baht to gain against the Pound

Got it right didn't he and no knowledge of Brexit in those days, perhaps his progeny have fingers in the pie!

Some people seem to think this is funny. For me and my family this is turning out to be a huge tradgedy. At the age of 62 I can no longer properly support my family in Thailand and will have to leave my wife and children to go back to England to try to find work. I have not been to England for over 10 years and have nothing there. I have no idea what I will do maybe drive a taxi or van. Fun and games for Boris johnson and him millionair mates but disaster for the little people.

5 hours ago, bannork said:

He was extracting the urine. The only answer Brexiteers have to the relentlessly bad financial news they are generating is the economy will, one day, 'bounce back'. When or for what reason is deliberately kept vague. Unbelievable.

The continued fall in sterling is because of Johnson's threat to the EU over a no deal Brexit.  Then he goes to Scotland and says that he is working towards a deal and will go the extra thousand miles to get one.  Same thing he is telling the Welsh.

 

So which Boris should we believe?  The one spending £100,000,000 on preparing for his no-deal Brexit or the one who is going that extra 1,000 miles and is confident in getting a deal?

 

As always Johnson spouts his rubbish to the audience in front of him at the time.  Does anyone actually believe anything he says?

9 hours ago, brucec64 said:

This is obviously project fear. There is no conceivable downside to any form of Brexit, deal or no deal.

I wonder how many ???? you will get for your comment at the end of the day??? 

Bangkok Bank Exchange for cash

Today

GBP

United Kingdom

36.72

 

 

 

GBP in Euros

1 hour ago, jimballard said:

Some people seem to think this is funny. For me and my family this is turning out to be a huge tradgedy. At the age of 62 I can no longer properly support my family in Thailand and will have to leave my wife and children to go back to England to try to find work. I have not been to England for over 10 years and have nothing there. I have no idea what I will do maybe drive a taxi or van. Fun and games for Boris johnson and him millionair mates but disaster for the little people.

Okay so you have some sympathy from me, to a point. But let me ask you. You are not old enough to get your state pension. Why are you not working in Thailand, as you are not old enough to retire, unless you are on a personal pension. Did you not think that markets in the world anywhere can have a reduction for anything. Brexit is a classic example,. It hasn't even happened yet and the markets from hearsay, speculation and trying their best to stop investors and people from wanting out of the EU.

 

Politicians historically have always been more affluent than the common person. Have you seen the wealth of Jeremy Corbyn in that little council house (NOT) in London, of his.

 

There was a binary democratic referendum with leave winning. It hasn't happened yet and so many are trying to reverse it. You haven't been the UK , so you say for 10 years, so what was your plans moving to Thailand. Why are you blaming the referendum result.  I am genuinely interested to find out more, as i am not flaming you, just want to know more background history.

 

 

1 hour ago, jimballard said:

Some people seem to think this is funny. For me and my family this is turning out to be a huge tradgedy. At the age of 62 I can no longer properly support my family in Thailand and will have to leave my wife and children to go back to England to try to find work. I have not been to England for over 10 years and have nothing there. I have no idea what I will do maybe drive a taxi or van. Fun and games for Boris johnson and him millionair mates but disaster for the little people.

I really feel for you sir, there are many who are in similar situations and I hope it is resolved soon and allow you to continue the rest of your life in peace. 

11 minutes ago, rosst said:

I really feel for you sir, there are many who are in similar situations and I hope it is resolved soon and allow you to continue the rest of your life in peace. 

There are many ex-pats in Thailand who have taken early retirement or have rented out their property in the UK to finance their life in Thailand.  Many have company pensions that kick in at 60 or earlier.  I knew dozens of such people when I lived in Thailand.  They will all be struggling now and some will inevitably have to return to Britain and go back to work.

 

It's a hard pill to swallow, especially when you have a wife and children you have to leave behind.

1 hour ago, jimballard said:

Some people seem to think this is funny. For me and my family this is turning out to be a huge tradgedy. At the age of 62 I can no longer properly support my family in Thailand and will have to leave my wife and children to go back to England to try to find work. I have not been to England for over 10 years and have nothing there. I have no idea what I will do maybe drive a taxi or van. Fun and games for Boris johnson and him millionair mates but disaster for the little people.

I am in an identical position and sadly making my plans now. Good luck to all of us.

2 hours ago, jimballard said:

Some people seem to think this is funny. For me and my family this is turning out to be a huge tradgedy. At the age of 62 I can no longer properly support my family in Thailand and will have to leave my wife and children to go back to England to try to find work. I have not been to England for over 10 years and have nothing there. I have no idea what I will do maybe drive a taxi or van. Fun and games for Boris johnson and him millionair mates but disaster for the little people.

 

Agree , those people who think the gbp collapse is funny , probably dont even live in Thailand.

 Most expats are dependent on pensions , and their values in gbp are falling daily .

  A very uncertain future . 

   Returning to UK seeking employment , easier said than done .  Good luck..

 

 

 

12 hours ago, brucec64 said:

This is obviously project fear. There is no conceivable downside to any form of Brexit, deal or no deal.

This downsiding in foreing exchange value did already happen the last 3 years..  Jan 2016: 1 GBP = € 1,36, now € 1,11.

Very well doen to increase competiviness in export with much lower costs in €uro's and US$. Pity all imports also went up with 18-20%. Up for the pound to reach one once.

1 hour ago, baboon said:

I am in an identical position and sadly making my plans now. Good luck to all of us.

Good luck indeed to all who are suffering from this.  I moved back to the UK in 2011 for different reasons revolving about our son's education.  Cost of housing was an issue and my wife didn't embrace the downsizing very well but apart from that (and the weather) life in the UK has been good.  Took my wife quite a while to settle and it is difficult for some Thais to adjust.  Now she says she wouldn't go back to living in Thailand although she does miss her family.

 

3 hours ago, jimballard said:

Some people seem to think this is funny. For me and my family this is turning out to be a huge tradgedy. At the age of 62 I can no longer properly support my family in Thailand and will have to leave my wife and children to go back to England to try to find work. I have not been to England for over 10 years and have nothing there. I have no idea what I will do maybe drive a taxi or van. Fun and games for Boris johnson and him millionair mates but disaster for the little people.

This all Brits could have known when the would have informed themselves in time. Thank your Brexiteer-countrymen and the politicians. And of course your many colleagues UK pensionado's in TH, as an overwhelmingly majority voted for Brexit I read in TV.

3 minutes ago, puipuitom said:

This all Brits could have known when the would have informed themselves in time. Thank your Brexiteer-countrymen and the politicians.

A bit unfair.  

8 hours ago, bannork said:

He was extracting the urine. The only answer Brexiteers have to the relentlessly bad financial news they are generating is the economy will, one day, 'bounce back'. When or for what reason is deliberately kept vague. Unbelievable.

"It may be 50 years before we see the benefit of brexit" the world according to J.R.M .

The London Forex wisdom of this moring, published by Monex - London:

·         GBP. Every day is seemingly bringing fresh lows to sterling, with no definitive catalyst apart from the increased risk of a general election or a no-deal exit, especially with Boris Johnson and deputy Gove sending markets mixed messages. Following comments on no-deal being a million-to-one chance from Boris Johnson yesterday, Michael Gove confirmed that a no-deal exit has become the government’s working assumption. The crossing of wires pushed the pound to fresh 2-year lows against the dollar. Monday saw sterling’s 14th largest one-day decline against the dollar since the Brexit referendum in 2016, while the pound also suffering its 9th biggest fall against the euro. Anxiety over the Brexit process is shaking out any bulls left in the market for the pound as support levels come and go en route to the round 1.20 level. The best Brexit bellwether, that is GBPUSD, is sounding the warning alarm and isn’t showing any signs of appeasing in the short-run. The cost of protecting GBPUSD downside for 3-months is etching up to levels not seen since the March Brexit deadline was extended, but worryingly the pound sits a full 8-points lower than it did back in Q1. With little pencilled into the data calendar today, momentum is driving sterling’s price action as domestic politics continues its stranglehold on the currency before the Bank of England meeting on Thursday. Today, Johnson will travel to Wales as he continues his trip around the devolved nations. The new PM will be hoping for a warmer welcome in Wales after crowds booed him in Scotland, causing him to sneak out of the back door on his way out.

10 minutes ago, puipuitom said:

This all Brits could have known when the would have informed themselves in time. Thank your Brexiteer-countrymen and the politicians. And of course your many colleagues UK pensionado's in TH, as an overwhelmingly majority voted for Brexit I read in TV.

They did know and a "hit on the pound would be a small price to pay" to escape the tyranny of the unelected Nazis in Brussels or something like that. 

3 hours ago, jimballard said:

Some people seem to think this is funny. For me and my family this is turning out to be a huge tradgedy. At the age of 62 I can no longer properly support my family in Thailand and will have to leave my wife and children to go back to England to try to find work. I have not been to England for over 10 years and have nothing there. I have no idea what I will do maybe drive a taxi or van. Fun and games for Boris johnson and him millionair mates but disaster for the little people.

 

Really sorry to hear that Jim and wish you and your family all the best.

 

Your situation, and the probability many more will be or are in similar, is what makes my so angry. The grabbing parasitic politicians working on behalf of their banker and financial masters won't feel the pinch in the slightest. In fact they'll all be scurrying around like ants on a shit-heap making money out of it. The worst aspects of capitalism and human greed. The b/stards will be preaching austerity again soon whilst awarding themselves a juicy 15 % pay rise and working till they feel like it.

 

Why on earth so many believe their false promises and outright lies is mind boggling.