Pound dives on fears UK election may produce no clear winner
- Author: Zachary Reyes Jun 09, 2017,
Jun 09, 2017, 16:49
Above all, investors are anxious about the general uncertainty surrounding the country - whether a bruised May will resign in due course, whether the Conservatives will be able to form a new government or whether it will be an alliance of opposition parties, led by the Labour Party.
"There is a real risk that this general election could be used as a second referendum on the U.K.'s future relationship with the European Union - a last gasp attempt to stop Brexit in its tracks", Macquarie said.
But in the moments after the exit poll predicted the Conservatives would be the largest party, but with fewer MPs, the currency dived to around $1.2730 in Asian trading- its lowest point since the election was called in April. May has called the snap election a year early, aiming for a bigger majority to strengthen her hand in Brexit negotiations.
Interestingly, Sterling would end up treading water through the remainder of the session even as a steady stream of results confirmed that the vote will result in a so-called "hung parliament".
But the pound hit a seven month low of 88.5 pence per euro, down 2.3%, by 8am.
"Today's result will in part be seen as a vote against a definitive break from the European Union, and the market may soon begin to reassess the probability of a so-called "hard Brexit".
Tom Stevenson investment director for personal investing at Fidelity International said that the weak pound has provided a boost to the FTSE, "but that was against a backdrop of a more robust economy than anyone expected after the Brexit vote".
Markets had assumed May would easily increase her majority and betting agencies were taking wagers on whether she would lose her job.
Liquidity is expected to pick up through European trade and into the U.S. session so we could well see some big moves in the foreign exchange markets.
There was much less drama elsewhere, as the Japanese yen gave up early gains and eased to 110.38 per dollar.
US crude futures edged up 10 cents to $45.76 a barrel, with Brent crude at $47.95.
Comey accused Trump of firing him to try to undermine the investigation into possible collusion by his campaign team with Russia's alleged efforts to influence the 2016 election.
"So it's not particularly impactful for thinking about. Trump's economic agenda to go through".
The lack of shocking new revelations during the public section of the testimony buoyed the markets, with the Dow Jones index finishing a nearly nine points higher at 21,182.53, while the Nasdaq composite gained more than 24 points at 21,182.53 and the S&P 500 put on just over half a point to close at 2,433.79.
The Straits Times Index was trading 0.3 per cent higher around 1:30pm, after opening up 0.1 per cent, with traders saying many investors were waiting on the sidelines.
Oil prices remained subdued with Brent having settled at its lowest since November 29, the eve of an OPEC production cut deal.