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FTSE in red as hopes of avoiding no deal send sterling up

The pound rose by more than 1% against the US dollar.

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The pound dropped heavily last week on worrying Brexit news (Joe Giddens/PA)

The pound dropped heavily last week on worrying Brexit news (Joe Giddens/PA)

The pound dropped heavily last week on worrying Brexit news (Joe Giddens/PA)

A rise in the UK’s currency helped push its markets lower on Wednesday as the pound bounced back from some of last week’s misery over Brexit.

Sterling jumped by more than 1% against the dollar across the day as hopes emerged that the UK might avoid a no-deal Brexit.

Several Conservative MPs voiced concerns last week after the Government admitted it was planning to break international law around its negotiations with the European Union.

“The British currency rebounded after reports surfaced claiming Boris Johnson has reached a potential deal with Tory rebels, which would allow his team to begin rewriting the European Union withdrawal agreement,” said OFX currency analyst Sebastien Clements.

He added: “Of course, this would be a small win for Johnson, but with further negotiations with ministers on the continent looming, many who have expressed their unwillingness to compromise with the UK, Johnson faces a long road ahead.”

One pound now costs 1.2979 dollars, and 1.0966 euros, a rise of 1% and 1.3% respectively.

Meanwhile, the FTSE 100, which often mirrors whatever sterling decides to do, fell ahead of the close on Wednesday afternoon.

Earlier in the day, the index had been trading up slightly, as high as 6,119 points, but it ended the day on 6078.48.

It was a fall of 27.06 points, or 0.4%.

“The pound soured the FTSE’s session,” said Spreadex analyst Connor Campbell.

On the continent, markets fared better, with the Dax up 0.3%, and the Cac gaining 0.1%. US shares fared a little better, with the S&P 500 up 0.3% and the Dow Jones gaining 0.7%.

A barrel of Brent crude oil cost 4% more at the end of the day in Europe, rising to 42.17 dollars.

In company news, an almost 30% rise in like-for-like sales since early July pushed Loungers shares up by 13%, as the company benefited from the Government’s support for restaurants during August.

British Airways owner IAG dropped 0.9% as BA boss Alex Cruz was up in front of MPs on Wednesday. Mr Cruz said that people are still scared to travel and said the company is fighting for survival.

Rival airline Tui fared much worse. Its shares dropped nearly 6% after it revealed that it will refund all customers whose trips were called off because of the coronavirus.

The news that Redrow’s profits dropped by more than 65% was enough to shave 1.75% off its market value, after the housebuilder’s construction and sales were dented.

The biggest risers on the FTSE 100 were Land Securities, up 14.8p to 557.6p, 3i Group, up 24.6p to 974.6p, Mondi, up 38p to 1,580.5p, Ferguson, up 178p to 7,604p, and Experian, up 71p to 3,604p.

The biggest fallers on the FTSE 100 were Rolls-Royce, down 10.95p to 192.35p, Morrison, down 7.1p to 171p, Melrose Industries, down 3.2p to 122p, Just Eat Takeaway.com, down 174p to 8,248p, and London Stock Exchange, down 176p to 8,974p.

PA Media