LONDON: The pound struck new four-month lows Wednesday after British MPs slammed Prime Minister Theresa May's latest plan to pass her Brexit plan.
In morning London trade, sterling sank to $1.2662, the lowest point for four months, while the European single currency hit a three-month high at 88.14 pence.
"Politicians from all sides trashed her proposals, leaving the pound mired at four-month lows while the prime minister awaits her end of days," said OANDA senior market analyst Jeffrey Halley.
"A settlement remains as distant as ever," he warned.
May has already failed three times to pass her controversial withdrawal agreement in parliament, and has vowed to set out departure plans shortly after the next vote on her deal.
Asian and European stock markets meanwhile pushed upwards as dealers awaited the latest developments on the China-US trade war.
With Wall Street providing a positive lead, equities were mostly on the up but analysts warned traders were on edge and any unsavoury headlines could precipitate another sell-off.
Sterling had rallied Tuesday after prime minister May unveiled her revised EU divorce deal that included a promise for lawmakers to set a confirmatory referendum on whatever version of Brexit they end up approving.
However, the currency fell as quickly as it had risen as opponents of the original agreement attacked it as nothing more than a rehash.
May called the new proposals this parliament's "last chance" to end a political deadlock but with key MPs led by arch-Brexiters still unmoved, it is likely to fall flat for a fourth time.
- 'Like a lead balloon' -
"May's latest attempt to conjure up a viable compromise EU withdrawal bill went down like a lead balloon in her own party -- and didn't get visible support from anyone else, merely adding to uncertainty," noted Societe Generale analyst Kit Juckes.
Failure to get the deal through parliament will more than likely see May resign and possibly be replaced by a more hardline leader -- most bets are on the controversial Boris Johnson -- who would push for a no-deal exit, a scenario that could spell economic hardship.
Dealers are keeping a close eye on developments in the China-US trade tussle after the pair swapped tariff hikes and Donald Trump barred Chinese telecoms giant Huawei from the US market and put it on a sales blacklist.
A 90-day reprieve provided a semblance of hope that the row can be resolved and the two economic superpowers will hammer out a trade deal at some point.
But reports emerged that Trump is now considering banning Chinese surveillance camera makers from getting access to US components, in a similar move to that against to Huawei, which could further stoke tensions.
Attention is now on the release later in the day of the minutes from the Federal Reserve's most recent policy meeting, with hopes it will provide some idea about the state of the US economy.
Oil prices dipped after data pointed to a surprise increase in US inventories, while Washington appeared to tone down its rhetoric from recent weeks with Iran, saying it did not want a war with the Islamic republic.
- Key figures around 1040 GMT -
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Pound/dollar: DOWN at $1.2671 from $1.2706 at 2100 GMT
Euro/pound: UP at 88.14 pence from 87.84 pence
Euro/dollar: UP at $1.1169 from $1.1161
Dollar/yen: DOWN at 110.45 yen from 110.50 yen
London - FTSE 100: UP 0.5 percent at 7,362.88 points
Frankfurt - DAX 30: UP 0.4 percent at 12,188.19
Paris - CAC 40: UP 0.1 percent at 5,392.91
EURO STOXX 50: UP 0.2 percent at 3,391.87
Tokyo - Nikkei 225: UP 0.1 percent at 21,283.37 (close)
Hong Kong - Hang Seng: UP 0.2 percent at 27,705.94 (close)
Shanghai - Composite: DOWN 0.5 percent at 2,891.70 (close)
New York - Dow: UP 0.8 percent at 25,877.33 (close)
Oil - Brent Crude: DOWN 30 cents at $71.88 per barrel
Oil - West Texas Intermediate: DOWN 49 cents at $62.64
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