LONDON: The pound slumped more than one percent against the dollar and euro yesterday with post-Brexit trade talks between Britain and the European Union on a knife-edge. Major stock markets dropped except for London, as the sliding pound boosted share prices of multinationals trading on the benchmark FTSE 100 index.
The pound was down 1.2 percent against the dollar, while the euro jumped 1.1 percent versus the British currency. The FTSE climbed 0.3 percent, while oil prices retreated about 1.0 percent. Down by around half-a-percent, sterling's losses widened sharply after Britain's Sun newspaper said Prime Minister Boris Johnson was willing to abandon post-Brexit trade talks with the European Union.
Johnson was set to have a phone call with EU Chief Ursula von der Leyen at 1600 GMT, an EU spokesman said, with time running out to strike a deal before Britain leaves the EU single market on December 31. "Sterling is in the firing line because of the nerves surrounding the standoff, and that is the reason why the FTSE 100 is outperforming against its eurozone counterparts," said David Madden, analyst at CMC Markets UK.
"International stocks like British American Tobacco, AstraZeneca, Unilever, Diageo and Imperial Brands are all helping the index. "Those companies benefit from the slide in sterling as they earn a large portion of their revenue overseas," Madden added. The threat of a wrenching "no-deal" comes after Brussels' chief negotiator Michel Barnier briefed ambassadors from EU member states at a pre-dawn crisis meeting, warning that divisions were still stark after talks with his UK counterpart David Frost broke up overnight.
Traders are keeping tabs on the deployment of vaccines around the world, with Britain in line to start giving jabs this week. US approval of its first drug could come as soon as Friday. Belgium, France and Spain have said jabs will begin in January for the most vulnerable. - AFP