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Pound tumbles amid hints that Brexit process could begin by April

Published 19/08/2016

Sterling was down 0.7% against the dollar at 1.306 US dollars
Sterling was down 0.7% against the dollar at 1.306 US dollars

The pound took a tumble amid speculation the Government will trigger Article 50 by April next year, beginning the formal process of Britain's exit from the European Union.

Sterling was down 0.7% against the dollar at 1.306 US dollars, after a report by Bloomberg said Prime Minister Theresa May was sympathetic to pushing the button on Article 50 before the German and French elections in 2017.

The pound was also down 0.5% against the euro at 1.152 euros, while the FTSE 100 Index slipped 10.01 points to 6858.95.

Neil Wilson, markets analyst at ETX Capital, said the speculation comes despite previous reports suggesting the UK would have several years to prepare for Brexit.

"The less time the UK has to get things in order, the greater the market fears the fallout," he added.

The currency markets showed little movement earlier in the session when it was announced that UK public finances recorded a lower-than-expected surplus in the month after the Brexit vote.

The Office for National Statistics said the surplus - which does not include public sector banks - hit £1 billion in July, down £200 million compared with the same month last year.

Economists were pencilling in a figure of £1.6 billion.

Britain's finances tend to enjoy a strong July as self-employed people pay their income tax and businesses settle their corporation tax bills.

The Treasury's coffers were boosted by a 3.4% rise in tax receipts to £61.8 billion last month, compared with July last year.

The jump was fuelled by an 8.4% rise in corporation tax to £7.5 billion - its strongest July since 2011 when it reached £8.6 billion.

Across Europe, Germany's Dax was down 0.5% and the Cac 40 in France closed 0.8% lower.

Oil prices surged to pre-Brexit levels amid fresh hopes that an upcoming meeting of energy producers could ease production levels in a bid to support floundering prices.

Brent crude touched as high as 51.19 US dollars per barrel on Friday morning, its highest level since the EU referendum when it touched 51.16 US dollars.

The commodity's price surge marks the seventh straight day of gains, or an 11% rise for the week, but it later dropped back by 0.6% to hit 50.57 US dollars.

In UK stocks, budget airline easyJet was among the biggest risers amid speculation it is being eyed for a takeover.

Trader talk has suggested that the low-cost carrier could be subject to a 1,600p per share offer from founder Stelios Haji-Ioannou or a private equity suitor.

Shares were up more than 2% or 27p to 1105p.

The biggest risers on the FTSE 100 Index were Lloyds Banking Group up 1.4p to 55.2p, easyJet up 27p to 1105p, Morrisons up 2.8p to 195p, and Centrica up 3.3p to 237p.

The biggest fallers were Glencore down 7.7p to 188.6p, Taylor Wimpey down 4p to 153.3p, BHP Billiton down 22p to 1053p, and Ashtead Group down 23p to 1206p.

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