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British pound plunges amid Brexit uncertainty

media Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese 100 … Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this picture illustration, January 21, 2016. REUTERS/Jason Lee

The British pound sank this Monday to a near three-week low, as traders fretted over Brexit on the eve of another critical parliamentary vote for Prime Minister Theresa May.

In overnight Asian trade, sterling tanked to $1.2949 -- the lowest since 19 February. The pound also dropped against the euro to €1.16415.

Europe's equity markets meanwhile rose in early afternoon deals on Monday as investors snapped up bargain stock after last week's heavy losses that had been sparked by global economic fears.

London's benchmark FTSE 100 advanced 0.6 percent on the weak pound, which boosts share prices of key multinationals who earn vast sums abroad.

"The pound has started the new week a little on the back foot as the markets await what could be a pivotal few days on the Brexit front, with these developments remaining the primary driver of the currency for the foreseeable future," said analyst David Cheetham at brokerage XTB.

"Helped in part by the dip in the pound, the UK stock market has begun brightly... to trade back near its highest level in three weeks."

Sterling remains volatile

The EU's chief Brexit negotiator Michel Barnier told AFP on Monday that negotiations to break a deadlock on a deal to leave the bloc are now between May and members of her parliament.

"We held talks over the weekend and the negotiations now are between the government in London and the parliament in London," Barnier said as he arrived at EU headquarters in Brussels to discuss Brexit with envoys from the other 27 member states.

"We are 24-hours away from May's supposed 'meaningful' Brexit vote and the rumour is that (she) could lose this vote by a wider margin than the last one," according to Oanda analyst, Dean Popplewell.

"As expected, sterling remains volatile," he warned.

Two months ago, parliament had overwhelmingly rejected the withdrawal agreement May has struck with the European Union, and sent her back to Brussels to renegotiate.

As MPs prepare to vote again on the deal on Tuesday, the prime minister has little to show for her efforts, prompting warnings of another humiliating defeat.

'No progress' for May

"Though the Prime Minister is still valiantly trying to negotiate some last minute changes with the EU, she is neither making progress in Brussels nor at home," noted City Index analyst, Fiona Cincotta.

"The choice for MPs will be either a hard Brexit or postponing this date, and the latter option seems to be gathering more momentum.”

(with AFP)

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