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.


VW to stop doing business in Iran: Bloomberg

Updated 20 September 2018
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VW to stop doing business in Iran: Bloomberg

  • VW will still be able to do some business in Iran under a humanitarian exception
  • VW has scrapped plans it announced in July last year to sell cars in Iran for the first time in 17 years

WASHINGTON: Volkswagen has bowed to American pressure stemming from the US rejection of the multi-party nuclear deal and will end almost all business in Iran, Bloomberg News reported Wednesday.
The accord was reached Tuesday after weeks of talks between the German auto giant and the administration of President Donald Trump, said Richard Grenell, the US Ambassador to Germany, according to Bloomberg.
VW will still be able to do some business in Iran under a humanitarian exception, Bloomberg added.
In May, Trump pulled the US out of the deal it reached with Iran and five other countries in 2015. That accord lifted sanctions against Tehran in exchange for restrictions on its nuclear program.
Now, the US is reimposing those sanctions.
Bloomberg said VW has scrapped plans it announced in July last year to sell cars in Iran for the first time in 17 years.