Pound Drops as Brexit Disarray Drags On

The pound dropped versus the dollar and euro on Tuesday after British MPs once again rejected a series of alternative options to Prime Minister Theresa May's EU divorce deal.

Reacting to Monday's votes, the European Union's chief negotiator Michel Barnier warned it is "day after day more likely" that Britain will crash out of the bloc next week without an orderly withdrawal agreement.

In afternoon trading in London, the pound was down about 0.4 percent versus both the dollar and euro.

London's benchmark FTSE 100 index rose by one percent on the pound's fall, as it features several multinationals who earn vast sums in dollars.

"As ever, the pound is the clearest gauge of the market's view on continued (Brexit) uncertainty and is halfheartedly losing ground against the euro and the dollar," said Fiona Cincotta, senior market analyst at City Index. 

"Parliamentary disarray is also hitting the euro because a disorderly Brexit has the potential to affect European companies trading with the UK," Cincotta added in a client note. 

Trading on Wall Street opened slightly down after the opening bell on Tuesday.

Patrick O'Hare, an analyst at Briefing.com in the U.S., said it was "possible that a little bit of buyer fatigue is setting in".

"No one should be terribly surprised that there is a subdued tone this morning. The stock market made a nice leap Monday, hot on the heels of a nice leap on Friday, which capped off a triple long jump over January, February, and March," he said.

The dip in New York followed a U.S. government report that orders for durable goods -- a closely watched measure seen as a proxy for business investment -- fell in February by far more than expected.

In another downbeat note for the economic outlook, the World Trade Organization forecast Tuesday that global trade growth would be lower in 2019 than last year.

In its main annual forecast, the WTO revised its prediction for this year down from 3.7 percent to 2.6 percent, citing widespread "tensions" and economic uncertainty, including Brexit and tariffs between the U.S. and China.

- The bottom or a trend? -

Traders are now awaiting the start of the next round of top-level China U.S. trade talks in Washington, after reports of progress in last week's meeting in Beijing.

A series of olive branch measures from the Chinese side has lifted hopes the two will eventually reach a deal to end their tariffs row, which dragged on equities at the end of 2018.

This week also sees the release of U.S. March jobs data, which are closely watched for an idea about the state of the economy, with the Federal Reserve also using the figures to map its path for monetary policy.

The Fed's recent dovish lean has helped propel a rally across stock markets this year, with other central banks also looking to ease up on their tightening moves.

"Having the central banks take a step back, with the Fed saying that they're going to pause and that they're going to be patient at least toward the end of this year, I think that gives the market a little bit of time" to wait for economic data to turn around, said Victoria Fernandez, chief market strategist at Crossmark Global Investments in Houston. 

"Is this a bottom, is this a trend that we're starting to see -- an upward trend? If so that's gonna be positive for all of the markets," she added.

- Key figures around 1335 GMT -

Pound/dollar: DOWN at $1.3046 from $1.3103 at 2100 GMT on Monday

Euro/pound: UP at 85.86 pence from 85.58 pence

Euro/dollar: DOWN at $1.1203 from $1.1213

Dollar/yen: DOWN at 111.34 yen from 111.35 yen

London - FTSE 100: UP 1.0 percent at 7,389.98 points 

Frankfurt - DAX 30: UP 0.5 percent at 11,742.36 

Paris - CAC 40: UP 0.3 percent at 5,422.24

EURO STOXX 50: UP 0.3 percent at 3,396.25

New York - Dow: DOWN 0.3 percent at 26,146.27

Tokyo - Nikkei 225: FLAT at 21,505.31 (close)

Hong Kong - Hang Seng: UP 0.2 percent at 29,624.67 (close)

Shanghai - Composite: UP 0.2 percent at 3,176.82 (close)

Oil - Brent Crude: DOWN 11 cents at $68.90 per barrel

Oil - West Texas Intermediate: UP 25 cents at $61.84