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.
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.
The government has asked the Queen to suspend Parliament from the week of Sept. 10.
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
Which stocks are active?
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.
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.