Wednesday 22 May 2019

Pound struggles as investors worry over Brexit progress delays

It came as Theresa May headed to Brussels for a summit with EU counterparts.

Prime Minister Theresa May arrives at the European Council in Brussels (PA)
Prime Minister Theresa May arrives at the European Council in Brussels (PA)

By Kalyeena Makortoff, Press Association Chief City Correspondent

The pound slumped to its lowest level against the US dollar since November, with pressure mounting on Prime Minister Theresa May over slow Brexit progress as she took part in an EU summit in Brussels.

Sterling was trading down 0.4% against the euro at 1.120 and was down 0.2% versus the dollar to 1.308.

That was the lowest level for the pound against the greenback in seven months.

Mrs May was facing pressure from her EU counterparts over the slow pace of Brexit negotiations and lack of clarity over its plans while European Commission president Jean-Claude Juncker said plans were being made for a “no deal” exit.

Connor Campbell, a financial analyst at SpreadEx, said: “Concerns about a more pessimistic Brexit outlook from the country’s businesses, a lack of faith in Theresa May heading into Thursday’s EU summit and disappointment at a dovish message from (Bank of England) MPC member Jon Cunliffe left the pound in a sorry state.”

Speaking to the BBC, Mr Cunliffe dampened major rate rise expectations, saying interest rates were likely to rise at a gradual and limited pace.

He also raised concerns about the level of debt taken on by British households, who he said could be vulnerable during a recession.

The pound was near seven-month lows (PA)

The FTSE 100 ended the day nearly flat, down just 0.08%, or 6.06 points, at 7,615.63 points.

Across Europe, the French Cac 40 and German Dax tumbled nearly 1% and 1.4% respectively.

Brent crude prices rose 0.2% to 77.44 US dollars (£59.16) per barrel, extending gains following a bigger than expected fall in US oil inventories revealed earlier this week.

In UK stocks, Shire was the best-performing stock on the FTSE 100, rising 127p to 4,221.5p after shareholders voted down proposals by a group of rebel investors trying to derail its takeover by Takeda Pharmaceuticals.

Investors failed to gain backing for a proposal that would require shareholder approval for major acquisition, gaining only 10% of the vote at Takeda’s AGM.

Tobacco giant Imperial Brands jumped 77.5p to 2,811.5p after announcing it had taken a stake in Oxford Cannabinoid Technologies, which focuses on research, development and licensing of cannabis-based compounds and therapies.

BAE Systems rose 7.8p to 632p on news that the British defence giant won a £20 billion contract to build a new fleet of Australian warships under a 30-year contract.

Greene King plunged 57.6p to 581p as investors reacted to an 11.2% slump in adjusted pre-tax profits to £243 million after being hit by “unprecedented” cost hikes, weak consumer confidence and tougher competition.

Stagecoach jumped 5.8p to 139.9p after reporting bottom-line profits of £95.3 million, up from £17.9 million the previous year.

That is despite taking a £85.6 million hit after the Government stripped the transport giant of East Coast Main Line franchise.

The biggest risers on the FTSE 100 were Shire up 127p at 4,221.5p, Imperial Brands up 77.5p at 2,811.5p, British American Tobacco up 95p at 3,877p and Just Eat up 15.6p at 770.8p.

The biggest fallers on the FTSE 100 were Micro Focus International down 49p at 1,274p, Melrose Industries down 6.8p at 208.2p, Johnson Matthey down 109p at 3,576p and Glencore down 10.35p at 358.8p.

Press Association

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