Pound surges as post-Brexit transition deal sealed between UK, EU

The pound rose on March 19, 2018 after Britain and the EU reached a landmark deal on a two-year transition after Brexit that will buy businesses and citizens time to adjust to life after the divorce. (AFP)
Updated 19 March 2018
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Pound surges as post-Brexit transition deal sealed between UK, EU

LONDON: The pound rose Monday after Britain and the EU reached a landmark deal on a two-year transition after Brexit that will buy businesses and citizens time to adjust to life after the divorce.
World stock markets jittered, meanwhile, in a Facebook-led tech sell-off and ahead of a feared US interest rate hike later this week, as concerns of a possible trade war sparked by US President Donald Trump’s announcement on tariffs also weighed.
“The British pound was the biggest currency mover of the day,” said Jasper Lawler, head of research at London Capital Group. “Having the extra two years of continuity should reduce business uncertainty and encourage investment.”
But the “unfed elephant in the room,” the unresolved Irish border question, kept a lid on sterling’s gains, he added.
Rocking the US equity market were Facebook’s shares plummeting more than seven percent following reports of a large data breach.
EU Justice Commissioner Vera Jourova called “horrifying” reports that Cambridge Analytica, the data analysis firm hired by Donald Trump’s 2016 presidential campaign, stole information from 50 million Facebook user profiles to help design software to predict and influence voters’ choices.
“US stocks are solidly lower to begin the week as technology stocks are suffering on news of data misuse surrounding Facebook,” said analysts at Charles Schwab.
But the social media giant’s downturn was just one factor in a cocktail of reasons for selling stocks.
“Concerns over the potential for a Trump trade war still seem to be weighing on the minds of investors, with a lack of risk appetite still leading to caution in global stock markets,” FXTM research analyst Lukman Otunuga said.
Trump’s taxes on imports worldwide are to come into effect on March 23, with the exception so far of Canada and Mexico, which have won exemptions from the US.
EU Trade Commissioner Cecilia Malmstroem is heading to Washington to seek a similar exemption after the bloc threatened to hit flagship US products including peanut butter, orange juice and bourbon whiskey with counter measures.
The pound found strength in a deal reached Monday between Britain and the EU on a transition period between March 29, 2019 and December 31, 2020.
Crucially, the transition will give Britain and Europe more time to agree on a trade deal.
Weighed down by the stronger currency, the London FTSE 100 benchmark underperformed its European peers as a strong pound stands to hurt exporters.
Stock markets elsewhere dropped because of trade war fears, and the tariffs are set to overshadow the two-day meeting of the world’s richest 20 nations in Buenos Aires, beginning later on Monday.
“It’s been a rocky start to trading at the start of the week as the prospect of a trade war becomes ever more real,” said OANDA analyst Craig Erlam.
“Tariffs are likely to be the main topic of conversation at the G20 meeting.”
Sentiment was cautious before interest rate decisions this week from both the US Federal Reserve and the Bank of England, on Wednesday and Thursday respectively.
The Fed gathering will be the first under the stewardship of new boss Jerome Powell.
“The stress of what’s to come — especially Wednesday’s potentially rate-hiking Fed meeting — combined with a lack of distraction and the ongoing political instability in the US contributed to a pretty damn duff start to the week for the European indices,” added Spreadex analyst Connor Campbell.
The US central bank is expected to raise interest rates again but Powell’s remarks will be closely followed for clues about future increases, with some predicting another three this year in light of an improving economy.


Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

Updated 14 December 2018
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Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

  • Ransom payment would set dangerous precedent
  • NOC declared force majeure on exports on Monday

BENGHAZI: Libya’s state-owned National Oil Corp. (NOC) said it was against paying a ransom to an armed group that has halted crude production at the country’s largest oilfield.
“Any attempt to pay a ransom to the armed militia which shut down El Sharara (oilfield) would set a dangerous precedent that would threaten the recovery of the Libyan economy,” NOC Chairman Mustafa Sanalla said in a statement on the company’s website.
NOC on Monday declared force majeure on exports from the 315,000-barrels-per-day oilfield after it was seized at the weekend by a local militia group.
The nearby El-Feel oilfield, which uses the same power supply as El Sharara, was still producing normally, a spokesman for NOC said, without giving an output figure. The field usually pumps around 70,000 bpd.
Since 2013 Libya has faced a wave of blockages of oilfields and export terminals by armed groups and civilians trying to press the country’s weak state into concessions.
Officials have tended to end such action by paying off protesters who demand to be added to the public payroll.
At El Sharara, in southern Libya, a mix of state-paid guards, civilians and tribesmen have occupied the field, camping there since Saturday, protesters and oil workers said. The protesters work in shifts, with some going home at night.
NOC has evacuated some staff by plane, engineers at the oilfield said. A number of sub-stations away from the main field have been vacated and equipment removed.
The occupiers are divided, with members of the Petroleum Facilities Guard (PFG) indicating they would end the blockade in return for a quick cash payment, oil workers say. The PFG has demanded more men be added to the public payroll.
The tribesmen have asked for long-term development funds, which might take time.
Libya is run by two competing, weak governments. Armed groups, tribesmen and normal Libyans tend to vent their anger about high inflation and a lack of infrastructure on the NOC, which they see as a cash cow booking billions of dollars in oil and gas revenues annually.