The British pound dipped Thursday as Britons voted in a general election that seeks to determine the future of Brexit.
Having spiked overnight to a 10-month peak at $1.3229 on expectations of an election win for Prime Minister Boris Johnson’s Conservative Party, the pound slipped.
Johnson called Thursday’s snap vote in a bid to gain a decisive mandate to leave the European Union on January 31, more than three-and-a-half years after Britain narrowly voted in a referendum to leave.
“Just before voting opened, the polls suggested that a Conservative majority — seen as the preferred market outcome… was perceived as increasingly likely,” noted AJ Bell investment director Russ Mould.
However investors were sitting tight awaiting the vote outcome as polls have tightened in recent days, suggesting that a hung parliament, or no overall majority for either the Tories or main opposition Labour party, could still occur.
Stocks soften
Wall Street equities got off to a weaker start as American producer prices and jobless claims suggested “some weakness creeping into the US economy”, said Edward Moya at OANDA, adding however that the state of trade talks is the main factor fraying stock investors’ nerves.
Anxiety is deepening ahead of a Sunday deadline for fresh US tariffs on Chinese goods and no sign yet that they will be delayed.
Eurozone stock markets turned slightly negative, but London stocks held up well thanks to the weaker pound.
Stephen Innes at AxiTrader added that traders had been “de-risking and hedging” and it would take “definitive trade news headlines from the grand duke of Mara -a-Lago Twitter account” to lighten the markets’ mood.
‘Wise owl’ at the ECB
The ECB gave markets little to trade on the day that Christine Lagarde chaired her first monetary policy council meeting and subsequent news conference.
Interest rates remained unchanged and a massive bond-buying programme intact, and ECB economists came up with figures suggesting both an uptick in inflation and “signs of stabilisation in the growth slowdown”, which provided the euro with some tailwind.
Lagarde also said she would develop her own style and claimed to be neither dovish nor hawkish but aimed to be a “wise owl”.
Still, Lagarde “came off as slightly hawkish”, said OANDA’s Moya. “Lagarde seems poised to help take the eurozone out of negative rates,” he said.
Earlier Thursday in Asia, equity markets mostly closed higher after the Federal Reserve indicated it was unlikely to change US interest rates throughout next year.
The central bank, which has cut borrowing costs three times this year, said after a two-day meeting it would hold them for now and set its sights on low inflation and the global economy.
Key figures around 1435 GMT
Pound/dollar: DOWN at $1.3171 from $1.3196 at 2200 GMT
Euro/pound: UP at 84.68 pence from 84.35 pence
Euro/dollar: UP at $1.1139 from $1.1130
Dollar/yen: UP at 108.62 yen from 108.56 yen
London – FTSE 100: UP 0.3 percent at 7,238.91 points
Frankfurt – DAX 30: DOWN 0.1 percent at 13,138.45
Paris – CAC 40: DOWN 0.1 percent at 5,855.27
EURO STOXX 50: DOWN 0.1 percent at 3,682.50
New York – Dow: DOWN 0.2 percent at 27,866.43
Tokyo – Nikkei 225: UP 0.1 percent at 23,424.81 (close)
Hong Kong – Hang Seng: UP 1.3 percent at 26,994.14 (close)
Shanghai – Composite: DOWN 0.3 percent at 2,915.70 (close)
Brent North Sea crude: UP 0.4 percent at $63.94 per barrel
West Texas Intermediate: UP 0.2 percent at $58.91
AFP