Sterling surges as May secures Brexit assurances, Asian shares rise

Sterling rose sharply on Tuesday as speculation swirled that British Prime Minister Theresa May might be closer to securing approval for her Brexit deal.

The pound extended earlier gains as May won legally binding Brexit assurances from the European Union, in a last-ditch attempt to sway rebellious British lawmakers who have threatened to vote down her divorce deal in a parliamentary vote on Tuesday.

Sterling jumped as high as 1.3290 U.S dollars as some investors bolstered bet the prime minister could secure a divorce deal before Britain's scheduled March 29 departure from the EU.

The pound was last trading 0.6 percent higher on the day at 1.3223 U.S dollars, having been as low as 1.2945 U.S dollars at one stage on Monday.

The euro slid to its lowest on the pound since mid-2017 at 84.71 pence. It was last quoted down about 0.4 percent on the day at 85.15 pence.

At a joint news conference with European Commission head Jean-Claude Juncker late on Monday, May announced three documents aimed at addressing the most contentious part of the exit deal she agreed in November – the Irish backstop.

The Irish backstop is an insurance policy aimed at avoiding controls on the sensitive border between the British province of Northern Ireland and EU member Ireland.

If May loses the vote on Tuesday, she has said lawmakers will get a vote on Wednesday on whether to leave without a deal and, if they reject that, then a vote on whether to ask for a limited delay to Brexit.

Most other currencies stayed within familiar trading ranges before U.S. February inflation figures expected later on Tuesday.

The euro found support against the dollar on the Brexit news and the improvement in risk appetite. The single currency was last up about 0.15 percent at 1.1259 U.S dollars.

Asian shares rise

In early trade, MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 percent, following on from a rally on Wall Street overnight.

Tokyo stocks opened higher on Tuesday, tracking gains in New York, supported by the stable dollar-yen rate and news that the UK and European Union have agreed to changes in a Brexit deal.

The benchmark Nikkei 225 index gained 1.11 percent or 234.57 points to 21,359.66 in early trade while the broader Topix index was up 0.97 percent or 15.29 points at 1,596.73.

U.S. retail sales data from January, which came in above expectations, also helped to support shares despite downward revisions to December data, National Australia Bank analysts said in a note.

The dollar index, which measures the greenback against a basket of rivals, shed 0.18 percent to 97.034. But the dollar gained against the yen, adding 0.12 percent to 111.31.

Source(s): AFP ,Reuters