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| Pound suffers biggest one-day fall since 2010 after Boris Johnson's Brexit decision - business live | Pound suffers biggest one-day fall since 2010 after Boris Johnson's Brexit decision - business live |
| (35 minutes later) | |
| 11.18am GMT | |
| 11:18 | |
| Analyst: Here comes the great Brexit Selloff of 2016 | |
| Today’s selloff could be the start of a significant slump in the value of the pound. | |
| So fears Ranko Berich, head of market analysis at Monex Europe, who says the pound is “reeling” from the London Mayor’s move. | |
| He writes: | |
| “Sterling seems to have fallen off the Boris cliff this morning..... | |
| “Boris Johnson’s cleverly staged endorsement of the campaign to leave the United Kingdom grabbed headlines, and regardless of the London Mayor’s political motivations, this has had a sharp effect on sterling exchange rates. The implication is clear: while the Brexit referendum remains a live prospect, sterling is likely to be susceptible to these types of shocks, especially as the referendum date approaches. | |
| “This could just be the start of the great Brexit Selloff of 2016. As June 23rd approaches, polling is likely to narrow between the yes and no camps. In the run-up to the Scottish referendum some polls were even showing the independence vote on top. The prospect of such an event is pretty sobering for sterling, which would likely fall through even the multi-year lows seen earlier this year if this weekend’s reaction is anything to go by.” | |
| 11.16am GMT | |
| 11:16 | |
| Weak pound helps British factories | |
| Katie Allen | |
| The business group CBI has some slightly brighter news for Britain’s struggling manufacturing sector this month. | |
| Its latest poll of factory bosses found total order books remained steady after a fall in January, whilst export orders saw a very slight improvement from the previous month. Both now stand at around average levels. | |
| Rain Newton-Smith, CBI director of economics, notes that a weaker pound is helping exporters. She comments: | |
| “Demand and output have remained relatively unchanged from January’s performance. The challenging outlook for the manufacturing sector has stabilised a little, with sterling having depreciated, but Britain’s manufacturers are still facing a difficult global situation.” | |
| 10.41am GMT | 10.41am GMT |
| 10:41 | 10:41 |
| Investors are anticipating many long weeks of drama around the EU referendum, which could shift the markets: | Investors are anticipating many long weeks of drama around the EU referendum, which could shift the markets: |
| Now that "Brexit" vote date has been decided we can now look forward to 4 months of name calling and scare mongering from both sides. #gbp | Now that "Brexit" vote date has been decided we can now look forward to 4 months of name calling and scare mongering from both sides. #gbp |
| 10.27am GMT | 10.27am GMT |
| 10:27 | 10:27 |
| Here’s more reaction from the City to Boris’s intervention: | Here’s more reaction from the City to Boris’s intervention: |
| Sterling's plunge for Boris larger than for the YouGov poll showing Yes winning in Scotland https://t.co/F5BvQSI8vU pic.twitter.com/Zrj1aEAcT0 | Sterling's plunge for Boris larger than for the YouGov poll showing Yes winning in Scotland https://t.co/F5BvQSI8vU pic.twitter.com/Zrj1aEAcT0 |
| Sterling now seeing largest one day fall since 2010 General Election left us with a hung parliament. | Sterling now seeing largest one day fall since 2010 General Election left us with a hung parliament. |
| Of course Boris is a big deal. He's probably most popular politician in a politician-hating country. That's why £ is off. | Of course Boris is a big deal. He's probably most popular politician in a politician-hating country. That's why £ is off. |
| 10.24am GMT | 10.24am GMT |
| 10:24 | 10:24 |
| Rating agency Moody’s has weighed in on the EU referendum - warning that it could cut Britain’s credit rating if the Out Campaign win in June. | Rating agency Moody’s has weighed in on the EU referendum - warning that it could cut Britain’s credit rating if the Out Campaign win in June. |
| It told clients this morning that the outcome of the referendum is “too close to call”, and that Brexit would harm the economy. | It told clients this morning that the outcome of the referendum is “too close to call”, and that Brexit would harm the economy. |
| Here’s a flavour: | Here’s a flavour: |
| In Moody’s view the economic costs of a decision to leave the EU would outweigh the economic benefits. Unless the UK managed to negotiate a new trade arrangement with the EU that preserves at least some of the trade benefits of EU membership, the UK’s exports would suffer. It would likely lead to a prolonged period of uncertainty, which would negatively affect investment, in Moody’s view. | In Moody’s view the economic costs of a decision to leave the EU would outweigh the economic benefits. Unless the UK managed to negotiate a new trade arrangement with the EU that preserves at least some of the trade benefits of EU membership, the UK’s exports would suffer. It would likely lead to a prolonged period of uncertainty, which would negatively affect investment, in Moody’s view. |
| It would also place a significant burden on policy-makers who would have to renegotiate the UK’s trade relations with the EU and other countries and regions, as well as reconsider other areas such as regulatory and immigration policies.... | It would also place a significant burden on policy-makers who would have to renegotiate the UK’s trade relations with the EU and other countries and regions, as well as reconsider other areas such as regulatory and immigration policies.... |
| Moody’s added that it would cut the outlook on Britain’s credit rating to ‘negative’ following a vote to exit, “pending greater clarity on the longer-term impact on the UK’s economic and financial strength”. | Moody’s added that it would cut the outlook on Britain’s credit rating to ‘negative’ following a vote to exit, “pending greater clarity on the longer-term impact on the UK’s economic and financial strength”. |
| 10.16am GMT | 10.16am GMT |
| 10:16 | 10:16 |
| More bad news. The pound has hit a 15-month low against a basket of other currencies, according to a Reuters newsflash. | More bad news. The pound has hit a 15-month low against a basket of other currencies, according to a Reuters newsflash. |
| Sterling is only at a three-week low against the US dollar. But if it loses another cent, it will be its lowest in over six years. | Sterling is only at a three-week low against the US dollar. But if it loses another cent, it will be its lowest in over six years. |
| Pound once again approaching 2009 lows at prospect of UK's Jun referendum on EU membership. pic.twitter.com/acqEMzJX4s | Pound once again approaching 2009 lows at prospect of UK's Jun referendum on EU membership. pic.twitter.com/acqEMzJX4s |
| 10.12am GMT | 10.12am GMT |
| 10:12 | 10:12 |
| New economic surveys have shown that Europe’s economy is slowing, potentially bolstering the Brexit case. | New economic surveys have shown that Europe’s economy is slowing, potentially bolstering the Brexit case. |
| Business growth across the eurozone is currently the weakest in over a year, data firm Markit reported this morning. | Business growth across the eurozone is currently the weakest in over a year, data firm Markit reported this morning. |
| Its eurozone PMI, which tracks thousands of service sector and manufacturing firms, has dropped to 52.7 this month, from 53.3, closer to the stagnation point (50.0). | Its eurozone PMI, which tracks thousands of service sector and manufacturing firms, has dropped to 52.7 this month, from 53.3, closer to the stagnation point (50.0). |
| That suggests the eurozone economic recover, never the most vigorous of creatures, is running out of steam. | That suggests the eurozone economic recover, never the most vigorous of creatures, is running out of steam. |
| PMI suggests Eurozone GDP growth could slow to 0.2% in Q1 https://t.co/Xjcs0jL9Hy | PMI suggests Eurozone GDP growth could slow to 0.2% in Q1 https://t.co/Xjcs0jL9Hy |
| 9.52am GMT | 9.52am GMT |
| 09:52 | 09:52 |
| Looking for Andy Sparrow's liveblog? It's here | Looking for Andy Sparrow's liveblog? It's here |
| My colleague Andrew Sparrow is up and running, covering all the drama in Westminster in his Politics Live blog. | My colleague Andrew Sparrow is up and running, covering all the drama in Westminster in his Politics Live blog. |
| He’s kicked off with the news that Boris’s father, Stanley, has firmly denied that his son is scheming to become prime minister by supporting the Out campaign. | He’s kicked off with the news that Boris’s father, Stanley, has firmly denied that his son is scheming to become prime minister by supporting the Out campaign. |
| Related: Boris Johnson's Brexit declaration could be 'career-ending', his father claims - Politics live | Related: Boris Johnson's Brexit declaration could be 'career-ending', his father claims - Politics live |
| Stanley told Radio 4’s Today programme that: | Stanley told Radio 4’s Today programme that: |
| I think he has done a really well-thought-out move. When I say move, it is a move in the sense it represents his deep conviction that at this moment this is what he needed to do. Honestly, I think to say this is a careerist sort of move would be a total travesty. | I think he has done a really well-thought-out move. When I say move, it is a move in the sense it represents his deep conviction that at this moment this is what he needed to do. Honestly, I think to say this is a careerist sort of move would be a total travesty. |
| I cannot think of any more career-ending move than to do what he did yesterday, in the sense that he is leaving the mayoralty in May. If he wanted to get a nice job in the cabinet on May 8 this is not the way to do it. | I cannot think of any more career-ending move than to do what he did yesterday, in the sense that he is leaving the mayoralty in May. If he wanted to get a nice job in the cabinet on May 8 this is not the way to do it. |
| Boris Johnson's dad claims Boris's Brexit move cd be 'career-ending' (plus why he wasn't convincing) - https://t.co/wLQYpzpfMJ | Boris Johnson's dad claims Boris's Brexit move cd be 'career-ending' (plus why he wasn't convincing) - https://t.co/wLQYpzpfMJ |
| 9.46am GMT | 9.46am GMT |
| 09:46 | 09:46 |
| The pound has fallen against all 31 of the other major currencies this morning, showing the scale of the rout: | The pound has fallen against all 31 of the other major currencies this morning, showing the scale of the rout: |
| #Brexit fears batter #sterling (all 31 of its major peers are rising against the pound)... pic.twitter.com/UzbE6Kx83G | #Brexit fears batter #sterling (all 31 of its major peers are rising against the pound)... pic.twitter.com/UzbE6Kx83G |
| 9.38am GMT | 9.38am GMT |
| 09:38 | 09:38 |
| Pound suffers biggest fall since 2010 | Pound suffers biggest fall since 2010 |
| Ouch. The pound has now suffered its biggest one-day fall since the 2010 general election. | Ouch. The pound has now suffered its biggest one-day fall since the 2010 general election. |
| This morning’s 1.7% plunge hasn’t been seen since May 2010, according to the data on our Reuters terminals. | This morning’s 1.7% plunge hasn’t been seen since May 2010, according to the data on our Reuters terminals. |
| Bloomberg agrees, saying: | Bloomberg agrees, saying: |
| The pound dropped 1.7% to $1.4163 as of 9:20 a.m. in London, set for the biggest decline since the the day of the U.K. General Election on May 6, 2010. | The pound dropped 1.7% to $1.4163 as of 9:20 a.m. in London, set for the biggest decline since the the day of the U.K. General Election on May 6, 2010. |
| While the currency is down 3.9% this year, it remains above an almost seven-year low of $1.4080 reached in January. | While the currency is down 3.9% this year, it remains above an almost seven-year low of $1.4080 reached in January. |
| Valentin Marinov, currency strategist at Credit Agricole, confirms that the City is more worried about the June referendum: | Valentin Marinov, currency strategist at Credit Agricole, confirms that the City is more worried about the June referendum: |
| “The fact that prominent members of the Conservative Party announced they will campaign for Britain to leave the EU likely underscored investors’ concerns that Brexit risks could increase from here despite the deal.” | “The fact that prominent members of the Conservative Party announced they will campaign for Britain to leave the EU likely underscored investors’ concerns that Brexit risks could increase from here despite the deal.” |
| Last time options markets were this bearish on GBPUSD we were recovering from the 2010 election/hung parliament - pic.twitter.com/cJpjRIR1j3 | Last time options markets were this bearish on GBPUSD we were recovering from the 2010 election/hung parliament - pic.twitter.com/cJpjRIR1j3 |
| 9.20am GMT | 9.20am GMT |
| 09:20 | 09:20 |
| Ilya Spivak, currency strategist at DailyFX, suggests Boris’s popularity is fuelling today’s sterling selloff: | Ilya Spivak, currency strategist at DailyFX, suggests Boris’s popularity is fuelling today’s sterling selloff: |
| “The British Pound slumped at the start of the trading week after London Mayor Boris Johnson said he would campaign for the UK to leave the EU ahead of a referendum on membership in the regional bloc set for June 23. | “The British Pound slumped at the start of the trading week after London Mayor Boris Johnson said he would campaign for the UK to leave the EU ahead of a referendum on membership in the regional bloc set for June 23. |
| A recent poll showed Johnson is second only to Prime Minister David Cameron in influencing likely voters. | A recent poll showed Johnson is second only to Prime Minister David Cameron in influencing likely voters. |
| (that’s the IPSOS Mori poll I posted earlier) | (that’s the IPSOS Mori poll I posted earlier) |
| 9.17am GMT | 9.17am GMT |
| 09:17 | 09:17 |
| Pound selloff deepens | Pound selloff deepens |
| Sterling is plumbing new depths, as Boris Johnson’s decision to defy David Cameron continues to reverberate around the trading floors. | Sterling is plumbing new depths, as Boris Johnson’s decision to defy David Cameron continues to reverberate around the trading floors. |
| The pound has now dropped to $1.416 against the US dollar, a fall of 1.7% or 2.5 cents. | The pound has now dropped to $1.416 against the US dollar, a fall of 1.7% or 2.5 cents. |
| That’s the biggest fall in at least 11 months. | That’s the biggest fall in at least 11 months. |
| This chart shows how sterling took an immediate dive last night when trading began in Asia, and then weakened further once European traders got to their desks: | This chart shows how sterling took an immediate dive last night when trading began in Asia, and then weakened further once European traders got to their desks: |
| Jeremy Cook of currency firm World First reckons the City is over-reacting to Boris’s move. | Jeremy Cook of currency firm World First reckons the City is over-reacting to Boris’s move. |
| Do I think that BoJo is worth a 2 cent move in GBPUSD? Absolutely not, but markets wanted to smack GBP & he has handed them a big old bat | Do I think that BoJo is worth a 2 cent move in GBPUSD? Absolutely not, but markets wanted to smack GBP & he has handed them a big old bat |
| Updated | Updated |
| at 9.26am GMT | at 9.26am GMT |
| 9.15am GMT | 9.15am GMT |
| 09:15 | 09:15 |
| This handy chart from Bloomberg shows how the pound has become much more volatile (white line) in recent weeks: | This handy chart from Bloomberg shows how the pound has become much more volatile (white line) in recent weeks: |
| Updated | Updated |
| at 9.16am GMT | at 9.16am GMT |
| 9.06am GMT | 9.06am GMT |
| 09:06 | 09:06 |
| Here’s another sign of growing alarm in the City over the EU referendum. | Here’s another sign of growing alarm in the City over the EU referendum. |
| The cost of protecting against wild swings in the value of the pound has hit a 51-month high this morning. | The cost of protecting against wild swings in the value of the pound has hit a 51-month high this morning. |
| That suggests investors are more worried about Britain leaving the European Union, following Boris Johnson’s decision to back the Out campaign | That suggests investors are more worried about Britain leaving the European Union, following Boris Johnson’s decision to back the Out campaign |
| Reuters has the details: | Reuters has the details: |
| The six-month implied volatility in sterling/dollar -- a gauge of how sharp currency moves will be -- rose to 12.2 percent its highest since late 2011, according toReuters charts. The contract captures the date of the referendum, scheduled for June 23. | The six-month implied volatility in sterling/dollar -- a gauge of how sharp currency moves will be -- rose to 12.2 percent its highest since late 2011, according toReuters charts. The contract captures the date of the referendum, scheduled for June 23. |
| Sterling options point to heightened #Brexit stress https://t.co/7s1PD1vbGl pic.twitter.com/hZIHCvUf7j | Sterling options point to heightened #Brexit stress https://t.co/7s1PD1vbGl pic.twitter.com/hZIHCvUf7j |
| 8.53am GMT | 8.53am GMT |
| 08:53 | 08:53 |
| RBS Capital Markets analyst Sam Hill also blames the Out Campaign for weakening the pound: | RBS Capital Markets analyst Sam Hill also blames the Out Campaign for weakening the pound: |
| With both Michael Gove and Boris Johnson coming down on the “Leave” side of the debate, and almost half of the Conservative MPs, it is understandable that Sterling’s initial move has been lower. | With both Michael Gove and Boris Johnson coming down on the “Leave” side of the debate, and almost half of the Conservative MPs, it is understandable that Sterling’s initial move has been lower. |
| Uncertainty is the only certainty where the economics of Brexit is concerned. So, with political reaction to Friday’s deal looking more mixed than the Prime Minister would have hoped for, in the short term it is likely that the exchange rate will be sensitive to news which is seen to increase the probability of Brexit. | Uncertainty is the only certainty where the economics of Brexit is concerned. So, with political reaction to Friday’s deal looking more mixed than the Prime Minister would have hoped for, in the short term it is likely that the exchange rate will be sensitive to news which is seen to increase the probability of Brexit. |
| Fantastic pictures of Boris Johnson leaving his home this morning. pic.twitter.com/7mG2sH6ZpT | Fantastic pictures of Boris Johnson leaving his home this morning. pic.twitter.com/7mG2sH6ZpT |
| 8.49am GMT | 8.49am GMT |
| 08:49 | 08:49 |
| Scotiabank analyst Alan Clarke agrees that Boris’s intervention is significant. He told clients this morning that: | Scotiabank analyst Alan Clarke agrees that Boris’s intervention is significant. He told clients this morning that: |
| Another key development over the weekend was that London Mayor, Boris Johnson MP came out in support of the ‘leave’ campaign. This is potentially crucial since he is the most popular politician in the country and connects with young and old voters alike. | Another key development over the weekend was that London Mayor, Boris Johnson MP came out in support of the ‘leave’ campaign. This is potentially crucial since he is the most popular politician in the country and connects with young and old voters alike. |
| Updated | Updated |
| at 8.53am GMT | at 8.53am GMT |