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Brexit concessions lift pound ahead of crucial vote

Article By: ,  Senior Market Analyst
March 12, 2019 7:38 AM

Having achieved the unlikely feat of securing last minute concessions from the EU on the Irish backstop issue, PM Theresa May is back in Britain today for a crucial Brexit vote in Parliament. MPs are looking at a full day of debate before voting on May’s latest Brexit proposal this evening at a time that has yet to be specified.

With only 17 days to go till the Brexit deadline MPs won’t have much wriggle room. If they approve May’s deal than Britain will leave the EU on 29 March without a deal although most trade arrangements with the EU will remain in place until the end of 2020. If they cast their vote against her latest proposal then they will have to follow it up with another vote, most likely on Wednesday, on whether to delay Brexit, again for a period of time that has not been specified yet.

Sterling bounces above $1.32

The currency market took the news as a strong positive and sterling has built on last night’s recovery to bounce above $1.32 indicating that investors mostly assume the 29 March deadline will be postponed. While a delay in Brexit, or rather – avoiding a hard Brexit, is seen as good news for the currency, for businesses the protracted uncertainty is nothing but agony.

The FTSE is down 0.3%, dipping below 7,100 and then recovering slightly during early trade. The London gauge’s decline stands out from other global markets which are mostly in positive mode. On Wall Street, gains in Apple shares helped lift the Dow Jones Industrial 200 points at yesterday’s close and European markets also are mostly higher this morning.

Second crash hits Boeing shares

Boeing is about to find itself in a similar situation as BP did after the Deepwater Horizon platform exploded in the Gulf of Mexico in 2010. Country after country is suspending flights on Boeing 737’s MAX 8 planes after this type of plane had a second crash in five months. China, South Africa, Brazil and Mexico have already stopped using this type of plane and now South Korea is about to join them.

The details of what has caused the crash are yet to come out but Boeing’s shares lost more than 13% at one point yesterday and are now down 5.3%. The crisis could represent a major loss of confidence in Boeing's ability to deliver on safe air travel. If there is found to be a systemic problem with this model of aircraft, the implications for Boeing's business are going to be severe.

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