The FTSE is losing ground this morning as a stronger pound is hitting major industrials and a prospect of a delay in Brexit is adding to the uncertainty for businesses.
Pound rallies on potential Brexit delay
Brexit tensions that have been building over the last couple of weeks with party defections and the formation of the group of independent MPs seem to have yielded some results as the Prime Minister is now reportedly preparing to offer Commons the option to vote to delay Brexit should her current proposal be rejected.
Although she is still busy hammering out the details of a new Brexit deal which is due for a parliamentary vote on 12 March, there have been no signs that MPs would take to it any better than the previous one,which was flatly rejected. Instead, a no vote on the proposal could end up with a vote to delay article 50 and see the Brexit deadline kicked over to 2021. This would avoid a hard Brexit – the currency market’s worse-case scenario. The pound has gained a fresh spring in its step and is trading back up at $1.316 against the dollar, up 0.5%.
Trump’s tweet stops oil rally in its track
The steady rise of oil prices has not only come to a screeching halt but may have difficulty being rekindled as President Trump decided to stand in its way. The US president took to his favourite form of communication to tell the oil cartel OPEC that prices were too high and to relax production. Brent crude was sold off furiously in the aftermath of the comments and prices dropped 2.5%.
Pound rallies on potential Brexit delay
Brexit tensions that have been building over the last couple of weeks with party defections and the formation of the group of independent MPs seem to have yielded some results as the Prime Minister is now reportedly preparing to offer Commons the option to vote to delay Brexit should her current proposal be rejected.
Although she is still busy hammering out the details of a new Brexit deal which is due for a parliamentary vote on 12 March, there have been no signs that MPs would take to it any better than the previous one,which was flatly rejected. Instead, a no vote on the proposal could end up with a vote to delay article 50 and see the Brexit deadline kicked over to 2021. This would avoid a hard Brexit – the currency market’s worse-case scenario. The pound has gained a fresh spring in its step and is trading back up at $1.316 against the dollar, up 0.5%.
Trump’s tweet stops oil rally in its track
The steady rise of oil prices has not only come to a screeching halt but may have difficulty being rekindled as President Trump decided to stand in its way. The US president took to his favourite form of communication to tell the oil cartel OPEC that prices were too high and to relax production. Brent crude was sold off furiously in the aftermath of the comments and prices dropped 2.5%.
The London benchmark oil contract has recovered a little bit this morning but may have difficulty sustaining the rising trend. Trump’s comments were triggered by a 25% increase in oil prices since the beginning of the year which followed after Saudi Arabia, other OPEC producers and Russia agreed to cut output in December.
But apart from that the oil market is facing a more significant head wind as a bill called Nopec is currently being considered by Congress. If approved it would change US anti-trust law to revoke OPEC’s immunity to coordinate production levels in order to influence prices. Trump has not come out so far to say that he will support this bill but it could become a mighty political weapon in his dealings with Saudi Arabia. As the oil industry gathers in London this week for the annual International Petroleum Week this will be a reminder that oil production levels and global demand are not the only factors influencing this commodity.
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