LONDON MARKETS: Pound Plunges As Boris Johnson's Bid To Suspend Parliament Raises No-deal Brexit Fears

By Callum Keown

The pound plummeted on Wednesday as British Prime Minister Boris Johnson set out plans to suspend Parliament, slashing MPs' hopes of blocking a no-deal Brexit.

The move would see Parliament suspended for five weeks before returning on Oct. 14--less than three weeks before Britain's scheduled departure from the EU on Oct. 31.

Sterling plunged 0.7% to $1.2201 and was the world's worst-performing currency on Wednesday morning.

What's moving the markets?

Johnson's controversial move to prorogue Parliament, viewed as a bid to force through a no-deal Brexit, sent the pound plunging (http://www.marketwatch.com/story/pound-drops-sharply-on-reports-uk-parliament-to-be-prorogued-2019-08-28).

The government has asked the Queen to suspend Parliament from the week of Sept. 10 (http://www.marketwatch.com/story/johnson-to-suspend-parliament-before-brexit-date-2019-08-28).

Johnson's political opponents blasted the timetable, which would limit MPs' ability to block a no-deal Brexit.

Markets fear a no-deal Brexit, which the Bank of England's worst-case scenario predicted would see sterling crash to parity with the U.S. dollar for the first time in its history.

Citi economist Christian Schulz said: "The timing is convenient, it would shorten the time for Parliament to force the government away from a no-deal Brexit by two weeks.

"The no-deal opposition, especially the up to 40 Tory rebel MPs, is under pressure to demonstrate how far it is prepared to go to stop no-deal Brexit."

He added that it was now more likely that a no-confidence vote in the government would be called next week.

"Many bumps and twists remain, but today's announcement makes our base case, another Brexit delay and a general election, more likely."

The internationally exposed FTSE 100 outperformed the other major European indexes, trading flat as the pound slid

   The domestically focused FTSE 250   fell 0.9%. 

Which stocks are active?

Thomas Cook (TCG.LN) shares plunged 16.6% after the travel operator agreed a rescue deal with Chinese investor Fosun. Thomas Cook said shareholders' interests would be "significantly diluted" by the deal and warned it could even cancel its listing.

BP (BP.LN) rose 1.9% after agreeing to sell its Alaska assets for $5.6 billion, which will reduce its debt pile. Shares were also helped by rising crude prices due to a larger-than-expected decline in U.S. oil stockpiles.

(END) Dow Jones Newswires

August 28, 2019 07:46 ET (11:46 GMT)

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