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Brexit batters pound, Fed nerves hit stocks

Tuesday, March 14, 2017 - 01:46

Sterling has slipped to an eight week low against the dollar, as some investors turned nervous over a second Scottish independence referendum and the triggering of Brexit negotiations. But, as David Pollard reports, the Fed - and an expected U.S. rate rise - remained the main focus, with worries over elections in France and the Netherlands appearing to recede.

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The political drum beats louder. These protesters want EU nationals to be allowed to stay in the UK when it splits from the EU. Investors too already focussed on what lies beyond Article 50. (SOUNDBITE) (English) GLOBAL FINANCIAL ECONOMIST, COMMERZBANK, PETER DIXON, SAYING: "They're a lot more nervous about the prospect of any trade deal that might result from it. So I think the next few months, possibly even the the next couple of years, will be the litmus test as to investor nerves." Sterling's taking the biggest hit. The pound apparently shrugged off Monday's news of a move towards a second Scottish independence referendum. But then took fright at a parliamentary vote that clears the last hurdle to Article 50. It shaved half a cent off against a dollar already on the rise ahead of this week's Fed meeting. A hike priced in - though what the US central bank might do later is causing even more nerves. (SOUNDBITE) (German) HEAD OF CAPITAL ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "The question is what will they do afterwards? Will they just continue as before? I doubt it. But the sense of uncertainty is noticeable. We need facts now." China's latest facts are upbeat. Officials announcing factory output rose over 6 percent in January-February from a year earlier - and fixed-asset investment grew nearly 9 percent. Both above expectations, though retail sales growth has eased - if worry over the sustainability of the Chinese recovery hasn't. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "There are reasons to be concerned. Particularly over the last few years, we have seen a very rapid build-up of debt. The government has suggested that it wants to slow down the pace of that debt, and there is the risk that we could see some pockets of hard landing in some sectors of the Chinese economy." A concern not just for China - but also for Britain and other trading partners that export to it ...