Pound hits two year low on Brexit fears - as it happened

Graeme Wearden (until 2.30) and Nick Fletcher

from on 2016-03-23 17:50 (#180M5)

Sterling falls after new poll shows narrow lead for remain vote; boss of EDF tells MPs that a new nuclear plant will be built at Hinkley.

5.50pm GMT

As the long weekend approaches, stock markets had little inspiration to move in either direction so ended up virtually unchanged, with a couple of exceptions. Tony Cross, market analyst at Trustnet Direct, said:

The FTSE close on Wednesday replicated the atmosphere on trading floors across Europe as London's leading index finished flat on the day. With little in the way of corporate news or economic data to guide them, most investors decided to stay away, possibly eager not to get left exposed ahead of the long Easter weekend.

5.22pm GMT

The pound continued to come under pressure on growing uncertainty over the prospect of Britain leaving the European Union. A new poll showed the lead of the Remain campaign slipping, helping push sterling to a one month low against the euro and down more than a cent at $1.4094. The US currency was also supported by a number of hawkish comments from members of the Federal Reserve, who suggested rate rises were still on the cards - perhaps even in April - despite the current market volatility.

4.15pm GMT

Low oil prices have failed to give the global economy a lift and could cause serious problems, suggest IMF economists in a new blog post:

Oil prices have been persistently low for well over a year and a half now, but as the April 2016 World Economic Outlook will document, the widely anticipated "shot in the arm" for the global economy has yet to materialize. We argue that, paradoxically, global benefits from low prices will likely appear only after prices have recovered somewhat and advanced economies have made more progress surmounting the current low interest rate environment....

Persistently low oil prices complicate the conduct of monetary policy, risking further inroads by unanchored inflation expectations. What is more, the current episode of historically low oil prices could ignite a variety of dislocations including corporate and sovereign defaults, dislocations that can feed back into already jittery financial markets. The possibility of such negative feedback loops makes demand support by the global community- along with a range of country-specific structural and financial-sector reforms-all the more urgent.

3.30pm GMT

After the select committee meeting with EDF on a new nuclear plant at Hinckley Point, one of its MPs James Heappey has called on the French government to formally confirm the timetable for them to refinance the business. Heappey said:

This morning's evidence session was hugely frustrating. EDF CEO Vincent de Rivaz opened by saying 'categorically' that Hinkley C would go ahead and seeming to confirm that a final investment decision would come in 'early May'. But when pressed to confirm that date, he refused to do so.

It is clear from his responses to our questions that despite EDF's undoubted commitment to Hinkley, the final decision on the project is entirely in the hands of President Hollande and the French Government.

2.40pm GMT

Crude prices, which have been supported by hopes that a meeting of producers next month can agree to freeze output to cope with the supply glut, have slipped back after new US inventory figures.

US crude inventories rose by a much larger than forecast 9.4m barrels last week, more than three times higher than expected. Refineries cut output and imports jumped, adding to the crude stocks.

EIA Weekly Oil Inventories (Mar 18)
Crude +9.36 Mln v +2.53 Mln exp, prev +1.32 Mln
Cushing -1.26 Mln v +0.34 Mln exp, prev +0.55 Mln

2.32pm GMT

Over in the US , and new home sales rose 2% in February after a 7% fall in the previous month.

But this was lower than the expected 3% rise, and sales fell in three of the main regions, with only the West seeing an increase, which took some of the gloss off the figures.

2.17pm GMT

Here's the opinion poll that is hitting sterling:

#Remain leads #Leave by 7 points in latest ComRes poll for @itvnews
Remain: 48%
Leave: 41%
Don't know: 11% pic.twitter.com/XFW2wFSShX

2.15pm GMT

Sterling has just hit its lowest level against a basket of other currencies in more than two years. Thats's via Reuters, who are citing data from the Bank of England.

2.09pm GMT

Back to the other story of the morning... worries about the UK EU referendum.

The pound is continuing to drop today, now down almost one cent against the US dollar at $1.4113.

1.46pm GMT

There's drama in the UK courts today

Tom Hayes, the only person jailed in the UK for conspiring to rig the Libor rate, has been ordered to pay $1.25m, or 878k, after a 'proceeds of crime' hearing.

District judge Quentin Purdy at Westminster magistrates court on Wednesday ruled that Sarao's alleged actions constituted a crime in the UK.

The ruling means Sarao, 37, can be sent to the US to answer 22 counts of wire fraud, commodities fraud and market manipulation carrying a maximum sentence of 380 years' imprisonment.

1.27pm GMT

Energy and climate change committee member James Heappey shares our view of today's hearing:

After @CommonsECC #Hinkley session we know EDF want to do it but entirely in hands of French Govt. Their help v likely but not yet certain.

1.04pm GMT

Good news for fans of British Home Stores.

Landlords, suppliers and other creditors approved the 88-year-old retailer's company voluntary arrangement (CVA), an insolvency procedure, at a vital meeting in a hotel in west London on Wednesday.

The approval of the CVA secures the short-term future of BHS's 10,000 staff and 164 stores. However, the company still needs to restructure its pension scheme, which has a deficit of 571m and is likely to enter the Pension Protection Fund, and raise 100m so it can continue trading and fund a turnaround plan that includes modernising its shops and product range.

12.50pm GMT

Greenpeace chief scientist Doug Parr, who pointed to flaws in the Hinkley C project this morning, has issued a statement heavily criticising the situation:

"This morning the committee began to come to terms with the fact that the UK's energy policy has been annexed by EDF. It became very clear that Hinkley is dependant on the French state and the enthusiasm of the French and Chinese nuclear industries.

This has distorted our national infrastructure planning, and has led to the UK government undermining our nascent but booming renewable energy businesses and scaring off investment. It is unconscionable that in reality the decisions pending about the future of our energy system and whether the UK meet our future carbon targets are in the hands of the French Economy Minister."

12.45pm GMT

What have we just learned about Britain's biggest nuclear power project in decades?

1) EDF are still committed. Despite the shock resignation of its CFO, and concerns over its own finances, France's energy company is still planning to build Britain a new nuclear power station at Hinkley.

I will start by saying, clearly and categorically, that Hinkley Point C will go ahead.

That's good news for the UK. It has been a long road. The project has successfully passed a huge number of regulatory, commercial and operational milestones.

Vincent de Rivaz, CEO @EDFEnergy speaking about #Hinkley Point C @CommonsECC pic.twitter.com/FHna7nLfIn

If the French government doesn't commit to that recapitalisation [of EDF], you can't build us a power station because you've not got the cash.

.@JSHeappey: When will you take final Hinkley investment decision? De Rivaz says very soon. Cannot give precise date pic.twitter.com/xIonFdKBpo

.@AngusMacNeilSNP EPR being built in Finland is 9 yrs behind & 5.2bn over budget. Flamanville 6 yrs late & 7.2bn ovr pic.twitter.com/Zqyev1DfxV

My summary of @CommonsECC session: The #hinkley #nuclear emperor remains fully and resplendently clothed, says EDF

12.06pm GMT

The session ends with chairman Angus MacNeil saying the committee has heard EDF's confidence about Hinkley "loud and clear."

But they want to see action - a final investment decision on Hinkley by early May.

"If Hinkley C is not in Queen's Speech on 18 May, @CommonsECC reserves right to recall EDF", says @AngusMacNeilSNP pic.twitter.com/gJ8zE2nnSl

11.59am GMT

The committee turn to China's Taishan nuclear power station, which is using similar technology as Hinkey C.

Q: When will Taishan be up and running?

11.51am GMT

The committee are concerned about problems at the Flamanville nuclear power plant in France - will they affect Hinkley?

Humphrey Cadoux-Hudson, managing director for Nuclear New Build at EDF, says that engineers are already addressing concerns about Flamanville. Lessons can be learned for Hinkley.

#hinkley EDF says reactor pressure vessel will be made using diff process to flawed ones at Flamanville > so another "first of a kind"?

EDF say no EPR #nuclear reactors like #Hinkley operating in the world because thry take time & cutting edge. Or maybe because they're crap.

11.40am GMT

Labour's Matthew Pennycook MP isn't impressed with what he's hearing this morning.

He tells the energy chiefs that:

If this power station was fuelled on confidence and passion it would be up and running, but it's not.

11.38am GMT

The committee ask Zhu Minhong of China General Nuclear, EDF's partner in the project, when he expects Hinkley to be signed off.

Zhu explains that CGN are happy to be involved in Hinkley, concluding that:

We are confident to say that this project will go ahead.

11.35am GMT

Angus MacNeil, the committee chairman, nails it:

Isn't the future of Hinkley Point C in the hands of the French government?

11.32am GMT

Conservative MP James Heappey moves in for the kill.

Heappey tells Vincent de Rivaz that he knows why EDF can't give a categorical pledge to make the final investment decision in early May.

If the French government doesn't commit to that recapitalisation, you can't build us a power station because you've not got the cash.

11.24am GMT

The committee are concerned about the cost of (eventually) decommissioning Hinkley Point C. Is enough money being put aside?

De Rivaz says this cost is fully recognised in the contract -- it's "an example of us and the UK government behaving in a responsible way".

EDF will put money aside 'like a pension' to pay for decommissioning of Hinkley and says it will not be a cost to the UK taxpayer

EDF: Funding for #Hinkley decommissioning included in financial model. "It's very positive", says boss.

11.20am GMT

Q: How much is Hinkley Point C actually going to cost? EDF say 18bn, but other estimates say 24.5bn

De Rivaz says the construction cost is 18bn. The larger figure comes from the European Union, and relates to another way by which the project could have been financed.

11.11am GMT

Q: Did EDF's chief finance officer resign over the Hinkley project?

De Rivaz declines to comment on the reasons for Thomas Piquemal's shock resignation in early March. But he insists that the company's top executives support the project.

#nuclear @CommonsECC De Rivaz refuses to comment on resignation of EDF finance director "we move on" #hinkley

11.08am GMT

De Rivaz insists that EDF is being responsible by sorting out its finances before making the 'final investment decision' on Hinkley.

MPs don't seem too impressed, though.

#hinkley EDF's de Rivaz wriggling as pushed to give date for final investment decision by James Heappey pic.twitter.com/AI23IWWH47

You've not advanced our knowledge on Hinkley final decision, MPs tell EDF's UK boss

11.06am GMT

The energy and climate change committee want to know what's holding EDF back from a final decision on the Hinkley project.

De Rivaz points says the fall in the oil price has put added strain on its finances, so it is in talks with the French government (its major shareholder) to finding a solution to these challenges.

11.03am GMT

EDF now backtracking from early May investment timetable on #Hinkley and just quoted only French Minister as his date. So now no further on

11.02am GMT

Q: Given EDF's confidence, when will it actually take the final investment decision to build Hinkley?

It will be taken very soon, insists CEO Vincent de Rivaz.

We cannot be more commited and more confident than we are.

10.56am GMT

10.53am GMT

The committee question Vincent de Rivaz's claim that Hinkley Point C is a good deal for the British public.

Q: We've heard that Hinkley is only economically fair if oil was $230 per barrel [it's $40 today], so how can it be fair to customers?

EDF says because #hinkley seen as too risky in France & too expensive in UK, the balance is right. Alternatively it's just a rubbish project

10.43am GMT

EDF chief executive Vincent de Rivaz has declared that the Hinkley Point C nuclear plant will proceed, despite concerns about the project.

He's reading a statement to the energy and climate change committee now, which begins

I will start by saying, clearly and catagorically, that Hinkley Point C will go ahead.

That's good news for the UK. It has been a long road. The project has successfully passed a huge number of regulatory, commercial and operational milestones.

We are confident and proud to be able to deliver this project, as it meets the UK's need for reliable, affordable, low-carbon electricity.

It is a fair deal - fair for customers, fair for investors.

10.32am GMT

A group of energy experts have told UK Parliament's energy and climate change committee today that the Hinkley Point C nuclear project is very bad value for money, and should be scrapped.

The future of the new nuclear power plant was thrown into doubt last month when the finance chief of EDF, the state-controlled French energy company, resigned.

It would preserve the rest of the nuclear options in the UK, as it would not cast any doubt on the UK's underlying commitment

But if the UK cancels the project it could jeapodise all the other projects in the pipeline.

They've got a great, great deal, if they can build it on time and on budget.....Once it's operational, that power station is going to be gold.

Experts say UK Hinkley nuclear power station is 'extremely poor value for money'.#UK#Hinkley #EDF https://t.co/toj7lKPWg6 via @BBCNews

10.04am GMT

The chairman of Lloyds of London has warned that Brexit would hurt its business.

John Nelson told Reuters this morning that:

"About 90 percent of our capital and business comes from outside the UK,"

"It would diminish our attraction as a market to invest in if we were not part of the EU."

9.44am GMT

Sports Direct has confirmed to the City this morning that its profits this year will be at the bottom end of the guidance issued in January.

"We are in trouble, we are not trading very well. We can't make the same profit we made last year...."

9.26am GMT

Boris Johnson, mayor of London, has begun testifying to the UK Treasury committee about the Eu referendum question.

#Boris says pro-EU "opinions much less strongly held than you might imagine" within City of London financiers on #Brexit

Boris Johnson questioned by Commons Treasury committee about EU referendum - Politics live https://t.co/VfJCumdPUE

9.18am GMT

Over in the City, shares in bookmaker William Hill have slumped by 13% after it warned that online profits are below forecasts.

8.51am GMT

Here's another great chart from Jamie McGeever of Reuters, showing how demand for protection against a sterling crisis has soared:

Sterling/dollar options show huge demand for puts vs calls.
Translated: FX market is very, very bearish on sterling pic.twitter.com/GtxRt98yCR

8.47am GMT

Brexit concerns will be high on the agenda at the Bank of England today.

"Without a doubt, Brexit is the top of everyone's agenda until June, and possibly after if we do vote to leave."

"The FPC's mandate is the financial system, so they'll be looking at whether banks will be able to continue to do their business if there is a vote to leave. They may also talk about other risks to the financial sector, whether there would be an exodus of firms."

`Brexit' Fretting at Bank of England May Be About to Intensify https://t.co/LDzte8l626 via @business

8.25am GMT

City traders may also be reacting to the latest Referendum opinion poll, from ICM.

It showed that the Leave campaign are leading by 43% to 41%, with 16% still undecided.

8.22am GMT

Sterling 3-month implied volatility, which now straddles June 23 EU referendum, jumps to 14.5%. Highest since 2010 pic.twitter.com/o5coZ6qYCp

8.19am GMT

The cost of insuring against a sharp fall in the pound is soaring this morning, in another sign of Brexit jitteriness.

Three-month sterling volatility (which tracks contracts that protect against wild moves in the pound) has hit levels not seen since the last general election.

Three-month sterling vol now captures EU vote day. https://t.co/h9wzsDA2l6 #wheeeee #keepcalmandsellsterling pic.twitter.com/ECSLbGIfqD

8.10am GMT

The pound is losing ground this morning, as concerns over Britain's upcoming EU referendum swirl through the City.

Serling has extended yesterday's losses, and is down almost a half a cent since trading began in London, to $1.4168 against the US dollar.

British Pound continues to drop vs Dollar as #Brussels attacks increase the probability of #Brexit. pic.twitter.com/VZsP4G4d4l

We are now exactly three months away from the UK's referendum on EU membership and some 'Brexit' protagonists have chosen to use the atrocities in Brussels as a campaigning tool.

The 'remain' campaign is based solely on warnings of how dreadful leaving would be, so the whole debate is thoroughly depressing. Meanwhile, slowing growth is hurting public finances, the Chancellor's spending cuts are in a mess and so it's no wonder the pound isn't flavour of the month.

7.52am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

There's a pre-Easter feeling in the City this morning, as traders start to wind down for the long weekend. The market volatility of January and February is but a memory, as investors hunker down and ponder the state of the global economy.

What we are seeing at present is about as dull as one will see. As detailed yesterday, it could be the shortened week, but it feels like market players have entered the saloon and tumbleweeds are rolling down the street.

Our European opening calls:$FTSE 6175 down 18
$DAX 9977 down 13
$CAC 4427 down 5$IBEX 8988 down 4$MIB 18681 down 18

Credit Suisse says cutting an extra 2,000 jobs this year will "improve its resilience" https://t.co/79uQOKLwQV pic.twitter.com/NsCN25wKt9

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