May’s key Brexit speech sends sterling further into the red
Investors did not react positively to the Prime Minister’s landmark Brexit speech.
Sterling fell further into the red on Friday as investors reacted to Prime Minister Theresa May’s much-anticipated Brexit speech in Florence.
The pound fell to daily lows in the midst of her landmark address, which outlined plans for a potential two-year transitional deal but confirmed that the UK would still eventually leave the single market and customs union as part of its divorce from the EU.
Her speech originally sent the pound to daily lows against the US dollar and euro, to 1.350 and 1.128 respectively.
Sterling made a slight recovery in afternoon trading, but was still down 0.4% against the greenback at 1.352 and down 0.5% versus the euro at 1.133.
David Madden, a market analyst at CMC Markets UK, said: “The GBP/USD saw a high amount of volatility today in light of Theresa May’s speech about Brexit in Florence.
“The pound came under pressure when Mrs May stated the UK would be leaving the single market and customs union, but some of the losses were reversed when the Prime Minister talked about a transitionary period – even though no details were given.
“Overall, sterling stood its ground, and the move could have been much worse. It is worth noting that the greenback is broadly lower so the pound has an easier time of it.”
But sterling’s fall helped boost the FTSE 100, as many of its listed multinational firms tend to benefit when foreign currencies are stronger than the pound.
The FTSE 100 ended the day up 0.64% or 46.74 points at 7,310.64.
It outperformed its European peers, with the French Cac 40 ending the day up around 0.3%, and the German Dax closing lower by around 0.06%.
Brent crude prices rose 0.2% to 56.56 US dollars per barrel, despite a meeting between Opec members and other major producers in Vienna coming to a close without a concrete deal to extend an oil production cut agreement.
In UK stocks, AstraZeneca topped the FTSE 100 after Bernstein raised its rating to “outperform” and increased its price target to 5,780p from 4,520p.
It sent the pharma group’s shares up 143p to 4,912p
Smiths Group held the bottom spot on the blue chip index, falling 96p to 1,517p after the engineering firm missed expectations despite boosting profits.
The FTSE 100 company, which owns John Crane and Smiths Medical, said pre-tax profits rose 17% to £528 million for the year ending in July. However, stripping out acquisitions and a favourable currency translation, revenues slipped 1% to £3.2 billion on an underlying basis.
Saga shares edged higher by 0.2p to 196.9p on Friday. The over-50s insurer and holiday firm said it was on course to achieve its fourth consecutive year of growth despite profits being squeezed by cost pressures.
It reported a 6.3% drop in pre-tax profits to £103 million for the six months ending in July, while revenues dropped £1.8 million to £435.4 million.
The biggest risers on the FTSE 100 were AstraZeneca up 143p to 4,912p, Johnson Matthey up 102p to 3,492p, Standard Life Aberdeen up 11.3p to 427.8p, and RSA Insurance Group up 15.5p to 634.5p.
The biggest fallers on the FTSE 100 were Smiths Group down 96p to 1,517p, Kingfisher down 3.5p to 296.7p, Smurfit Kappa Group down 22p to 2,347p, and Lloyds Banking Group down 0.54p to 66.91p.