Britain’s pound went ahead to a one month peak with speculation about UK Prime Minister Theresa May being bundled towards delaying Brexit. This helped the world share to take a breath of relief on Tuesday after it scaled a five-month high Asia’s pinned hopes on a U.S.–China trade deal have run into profit taking overnight. Europe had a bumpy start with the pound leaping to $1.3150 while London’s FTSE was pushed down by 1 percent by some poor company news.
The oil markets became steady after a blast from the United States President Donald Trump at OPEC for high oil prices caused the largest tumble of 2018. Bond yields were also slumping, but the FX moves dominated the market. Pound bulls clamped onto a report about Theresa May thinking about delaying the deadline on March 29 for the country’s exit from the European Union, one day after there was a shift towards the second referendum by the main labor opposition party.
Besides the pound’s gains against the dollar, it was also up almost half a percent against the euro and a one-month height at 86.31 pence. According to Jordan Rochester, a Nomura FX strategist, the downside risks of Brexit being lowered are occurring at the movement. However, the dollar remained at a one week low compared to its main peers while the market waited for Jerome Powell, the Federal Reserve chairman’s testimony that would help shed some light on why the Federal Reserve backed away from raising interest rates further this year.
The market is currently on the lookout for signs that the Federal Reserve is comfortable with the current state of policy according to Steven Dooley, a currency strategist at Western Union Business Solutions. He also said that the markets are waiting to hear the details about the end of the Federal Reserve’s balance sheet reduction program.
At the same time, the Indian markets were shaken by the recent border tensions between Pakistan and India. Both countries have nuclear arms, making the situation a dangerous one. As the broader NSE stock index slipped, the Indian rupee dropped, and bonds rose to safety.
Australian shares dropped 0.9 percent as they were weighed by energy stocks with the oil prices tumbling overnight. Japan’s Nikkei also dropped 0.4 percent, and the Chinese shares surged slightly with U.S. trade hopes rising on Monday. This caused the MSCI’s broadest index of Asia Pacific shares to dip by 0.5 percent.