Pound tumbles against dollar and euro as Ireland roundly rejects Boris Johnson's Brexit plan

Irish ministers and opposition react angrily to 'buffer zone' and checkpoint plans for border, sending sterling downwards as hopes of  a deal fade again 

Ben Chapman
Tuesday 01 October 2019 16:06
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Boris Johnson says he has ‘solution’ to secure Brexit deal by deadline

The pound tumbled more than half a per cent against the euro on Tuesday after Ireland vehemently rejected Boris Johnson’s latest Brexit plans for checks near the Irish border.

A UK manufacturing survey also revealed a fifth consecutive month of contraction in the sector as uncertainty around the economy’s prospects dragged on output, orders and employment.

Sterling dropped 0.48 per cent against the dollar to £1.223 by mid-afternoon and was 0.56 per cent down against the euro to €1.121.

The pound’s latest fall came after the prime minister's plan to throw up a “buffer zone” with customs posts on the Irish border attracted near-unanimous outrage across the Irish Sea, dashing hopes for an imminent breakthrough in efforts to secure a Brexit deal before the 31 October deadline.

Ireland’s foreign minister Simon Coveney said that the proposals are a “non-starter”.

“Time the EU had a serious proposal from the UK government if a Brexit deal is to be achievable in October. Northern Ireland and Ireland deserves better!” he tweeted.

Ireland’s main opposition party Fianna Fail also immediately rejected the idea.

The pound’s decline against the dollar could have been more precipitous were it not for more bad news for America’s economy.

A closely watched manufacturing survey delivered its worst reading in a decade, dealing a severe blow to Donald Trump’s repeated claims that he is at the helm of the strongest US economy in years.

The US ISM purchasing managers index plunged from 49.1 in August to 47.8 in September - well below the consensus forecast of 50.1. Any figure below 50 signals contraction.

“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019,” said Timothy Fiore, ISM chair.

“Overall, sentiment this month remains cautious regarding near-term growth.”

Global trade has slowed in large part due to the US president’s policies, notably a protracted trade war with China that has resulted in tariffs on hundreds of billions of dollars of imports and exports between the world’s two largest economies.

Mr Trump, who has in the past sought to take personal credit for US economic growth, attempted to deflect blame for Tuesday’s disappointing figures.

The president again took aim at Federal Reserve chair Jay Powell, claiming he was hurting manufacturers by allowing the dollar to “get so strong”.

Mr Trump tweeted: “As I predicted, Jay Powell and the Federal Reserve have allowed the dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!”

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