Pound sinks on Brexit woes as London stocks soar

The pound fell against the dollar to the lowest level since March 2017.
The pound fell against the dollar to the lowest level since March 2017.PHOTO: BLOOMBERG

NEW YORK (AFP) - The pound fell to levels not seen in over two years on Monday (July 29) as a no-deal Brexit seemed ever more likely, while London stocks surged thanks to bubbling takeover activity.

The moves in Sterling and the FTSE 100 were the most dramatic on an otherwise quiet day for global stocks. Wall Street finished mixed at the start of a news-jammed week that includes a likely Federal Reserve interest rate cut, Apple earnings and the resumption of US-China trade talks.

The pound fell against the dollar to the lowest level since March 2017.

"The British pound started weakening sharply today, with the market awaking to the reality of a new UK government, its rather combative stance on the current EU-UK Brexit deal and its open remarks on the rising probability of a no deal Brexit," said ING strategist Petr Krpata.

Krpata said sterling's woes a "meltdown" and said the decline was unlikely to be over, as "politics should remain the key negative for sterling in the months to come."

Prime Minister Boris Johnson has vowed to lead Britain out of the EU on October 31 even if this means doing so without a divorce agreement.

On Monday he urged EU leaders to drop their opposition to renegotiating Brexit.

London stocks, meanwhile rallied on corporate takeover news, with the FTSE 100 benchmark index of major blue-chip companies adding nearly two percent, vastly outperforming eurozone peers which ended on a softer note.

Britain's Just Eat and Takeaway.com of the Netherlands unveiled a plan to join forces to create a heavyweight in the rapidly-growing food delivery sector with around $8 billion in annual sales.

 
 

The combination of the two firms would create a delivery platform worth around US$11 billion capable of competing against Britain-based Deliveroo and Uber Eats of the United States with a strong presence in Britain, Canada, Germany and the Netherlands.

The news sent Just Eat's share price rocketing by over a quarter, topping the FTSE 100 risers board.

The second biggest gainer was the London Stock Exchange itself after it confirmed talks over a massive $27-billion takeover of US financial data provider Refinitiv, a move that would place it in direct competition with Bloomberg.

The takeover, which is worth the equivalent of 24 billion euros (US$26.7 billion) and marks a major switch in strategy under LSE CEO David Schwimmer, sent shares briefly spiking to a record.

In Paris, Peugeot shares were sharply weaker after chief executive Carlos Tavares told the Financial Times that he would be forced to shut a UK facility if market conditions turned "bad" as a result of a problematic EU departure.

In the US, the S&P 500 and Nasdaq pulled back from records set Friday, while the Dow edged higher.

The Fed is expected to cut interest rates on Wednesday for the first time in a decade, but the question of whether the US central bank will have to deliver more stimulus this year remains the subject of intense debate.