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Pound falls after UK parliament rejects Brexit plan


AFP London
The pound fell Friday after Britain's parliament again rejected a proposed deal to withdraw from the European Union.
Sterling had been mostly stronger against both the dollar and the euro in the runup to the vote, but then fell to its lowest point against the greenback in more than two weeks.
"Sterling's midday bounce felt a long way away on Friday afternoon, as MPs inflicted another embarrassment on a Theresa May premiership defined by them," said Spreadex analyst Connor Campbell.
Lawmakers in parliament's lower House of Commons defied May's plea to end a political deadlock over Brexit, defeating her withdrawal agreement by 344 votes to 286.
"No-one really wants to say it but we are in danger of sleepwalking into an unintended no-deal scenario here, an outcome that looked highly unlikely just a couple of weeks back, and this poses a major risk for the pound," said XTB analyst David Cheetham.
The EU Commission seemed to agree, saying after the vote that a no-deal Brexit was now a "likely scenario".
The pivotal vote came on the day Britain was supposed to leave the European Union until May asked the bloc's leaders last week for a little more time.
Stock markets, including London, meanwhile rallied, with investors looking past a downgrade of US growth to focus on the next round of top-level China-US trade talks.
Although equities have been dogged by fears over the outlook for the economy, markets have enjoyed a stellar first-quarter overall, mostly on hopes of a US-China tariffs deal and the prospect of lower borrowing costs.
European stocks were solidly higher by the mid-afternoon, while Wall Street was also firmly in the black in the late New York morning.
In commodities, oil prices were headed for a strong finish to the week, having enjoyed their best quarter in 14 years, with Brent crude jumping 26 per cent and WTI by 29 per cent since the start of the year on tighter supplies.
US President Donald Trump on Thursday called on OPEC to boost oil output following the price rises since the beginning of 2019.
The Organisation of Petroleum Exporting Countries in December reached a deal with Russia and some other non-cartel producers to limit output to shore up prices.
"While OPEC, and above all (kingpin member) Saudi Arabia, appeared in November to be obeying US President Trump's repeated demands to increase oil production, his tweets now are more likely to fall on deaf ears," analysts at Commerzbank said Friday.
Oil futures have won support also from unrest in OPEC-member Venezuela.
"US sanctions, power outages and mismanagement are having a massive effect on Venezuela's oil production and oil exports at present," they added in a research note.

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First Published: Mar 29 2019 | 9:20 PM IST

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