Sterling soars after UK PM calls early election, dollar dips

U.S. Vice President Mike Pence said on Wednesday that Washington would work with its allies and China to put economic and diplomatic pressure on North Korea after its failed missile test over the weekend.

French opinion polls show far-right leader Marine Le Pen and centrist Emmanuel Macron qualifying next Sunday for the May 7 run-off, but the gap with conservative Francois Fillon and far-leftist Jean-Luc Melenchon has been tightening.

In New York, disappointing quarterly results from corporate heavyweights Goldman Sachs and Johnson & Johnson dragged Wall Street stocks lower.

Investors are also concerned that the recent flaring of geopolitical tensions has shifted focus away from expected business-friendly reforms in the United States, seen as the fuel for the USA equity rally that peaked in early March.

"With concerns of the (U.S. President Donald) Trump agenda being pushed out a little bit and with the geopolitical tensions, this (earnings disappointments) is not the kind of news you needed", said Robert Pavlik, chief market strategist at Boston Private Wealth.

Sterling's strength sent the FTSE 100 lower, dropping 1.4% or around 105 points to 7,221 points.

Copper CMCU3 lost 2.11 percent to $5,572.00 a tonne.

ASIA'S DAY: Tokyo's Nikkei 225 edged up 0.1 percent to 18,432.20 as the yen weakened slightly.

Sterling was just off a six-month peak against the dollar above $1.28 having surged when British Prime Minister Theresa May called an early general election for June 8, seeking to strengthen her party's majority ahead of Brexit negotiations.

That has led certain forecasters to take a more bullish view on the currency, with Deutsche Bank reserving their long-held bearish call on sterling in the aftermath of the vote call.

The dollar was undermined in part by an eroding interest rate advantage as US bond yields dived to five-month lows.

The Pound Australian Dollar (GBP AUD) exchange rate fluctuated this morning following a surprise call for a snap election from Prime Minister Theresa May.

Stocks flat-lined and gold fell on Wednesday as investors continued to question the "reflation" trades that had lifted markets since the election of US president Donald Trump in November, while sterling basked in the glow of a six-month high following Tuesday's surprise news of a snap United Kingdom election.

Oil prices were weighed by concerns that USA production growth is undermining efforts to cut oversupply after a US government report said shale oil output in May was expected to post the biggest monthly increase in more than two years.

USA crude CLc1 added 0.1 percent to $52.69 a barrel, after falling 1 percent on Monday, its biggest decline in nearly a month.

Benchmark 10-year notes US10YT=RR last rose 20/32 in price to yield 2.1824 percent, from 2.252 percent late on Monday.

Despite uncertainty surrounding the outcome of the French Presidential elections, which is set to be held on April 23, EUR/USD rose by 0.62% to $1.0709.

Spot gold added 0.4 percent to $1,289.50 an ounce. US gold futures GCcv1 fell 0.05 percent to $1,291.30 an ounce.

  • Todd Kelly