The pound has come under some selling pressure today with the forced resignation of Priti Patel seeing Theresa May lose her second cabinet minister in less than a week. The FTSE 100 is little changed and remains above the 7500 level
GBPUSD near 2-month low
The latest problems in Westminster has weighed on sterling, with the pound falling back below the 1.31 handle against the US dollar to trade not far from its lowest level in 2 months. Ever since last summer’s referendum there has been heightened levels of political instability and there is little sign of this ending anytime soon. The PM was surely hoping to avoid further shuffling of her cabinet following the resignation of Michael Fallon for sexual misconduct and with Damian Green, Mrs May’s deputy, still under investigation for similar allegations and Foreign Secretary Boris Johnson again under fire, the current political situation can be politely described as a mess. Pound bulls hoping that politics would provide a catalyst for further gains have now been left scratching their heads as the latest developments once more undermine the government and distract from the main objective of securing an orderly exit from the European Union.
UK has most to lose in “no deal” scenario
Brexit negotiations are seemingly progressing at a snail’s pace with there now being very few who believe any sort of satisfactory deal can be struck before the March 2019 deadline set by Article 50. A transition deal which would prolong the negotiating period is seen by most as the best case scenario with an Oxford Economics forecast yesterday predicting that the UK is far more vulnerable to a “no deal” Brexit, than its European peers. According to the study the UK has 10 times more to lose than Germany, Spain and France and still double that of Ireland - who would be the worst hit of the remaining EU members.
Bitcoin hit with selling after software upgrade suspended
The meteoric rise of Bitcoin has been one of the biggest stories in financial markets this year with the cryptocurrency soaring higher and breaking out from a small niche investment into the mainstream. There have been several wild swings along the way, but not many more so than that seen yesterday when the price dropped precipitously from a new all-time high after news broke that a software upgrade scheduled for next week had been suspended. The SEGWIT2X upgrade was intended to double the capacity of the blockchain and speed up the entire system which has become clunky and far slower than traditional means of transferring money. The development threatens to destroy the united front amongst the Bitcoin community that has provided the foundations for the sensational run higher in recent months. Should investors begin to shun the market in favour of alternative crypto coins then we could well see some panic selling and a large decline in the not too distant future. On the other hand if the market can shrug this off and extend its rally then there will be even greater reason to believe that, what appears at times, to be an unstoppable march higher will continue. With the CME also yesterday announcing the contract specifications for their imminent offering of Bitcoin futures the 8th November could well be remembered as a seminal day for the market.
Investors unimpressed with new Burberry (LON:BRBY) CEO
The worst performing stock on the FTSE 100 today is Burberry, with the fashion retailer seeing a drop of almost 10% in its share price following comments from new CEO Marco Gobbetti. The Italian has been in the role less than 6 months during which time the stock has made solid gains but comments made in the latest trading update that Gobbetti wants to push the brand upmarket have been met with disdain in the markets. The firm has been performing fairly well with revenue for the 6 months to September increasing by 9% to £1.26B and pre-tax profits jumped 26% to £128 but it is the strategy update going forward from Gobbetti has taken prominence over these and seen a notable swoon in the share price.