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Tuesday 21 August 2018

Weak US dollar helps pound to post-Brexit vote high

The FTSE 100 closed up 16.39 points to 7,731.83.

EU and Union flags, as the pound surpasses the 1.40 US dollar mark for the first time since the Brexit vote (PA)
EU and Union flags, as the pound surpasses the 1.40 US dollar mark for the first time since the Brexit vote (PA)

By Ben Woods, Press Association Chief City Correspondent

The pound has climbed above the 1.40 mark against the US dollar for the first time since the Brexit vote sent the UK currency into free fall.

Sterling reached 1.402 versus the greenback on Tuesday, as further weakness from the American dollar pushed the pound beyond the psychologically-important milestone.

Brighter than expected Government borrowing data also gave impetus to currency traders, with figures from the Office for National Statistics (ONS) showing public sector net borrowing, excluding state-owned banks, falling by £2.5 billion to £2.6 billion in December.

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Pound versus US dollar graphic (PA)

The pound was 0.2% lower against the euro, while the FTSE 100 closed up 16.39 points to 7,731.83 thanks to a boost from no-frills airline easyJet.

James Hughes, chief market analyst at Axitrader, said: “All hail the mighty Pound. GBP/USD posted fresh 19-month highs during today’s session, after breaking the 1.40 level for the first time overnight in the same period.

“This move is undoubtedly a US dollar decline. The US dollar index has now broken below some key support levels on the hourly chart, and hits its lowest level since 2014 at 90.15.”

Across Europe, Germany’s Dax was 0.7% higher and the CAC 40 in France eased back by 0.1%.

The price of oil was on lingering near the 70 US dollar a barrel mark, boosted by production cuts from Opec and Russia and upgraded global growth forecasts from the IMF.

Brent crude rose more than 1% to 69.99 US dollars a barrel, with IMF’s World Economic Outlook lifting its global economic prediction by 0.2% to 3.9% for 2018 and 2019.

In UK stocks, budget carrier easyJet soared to the top of the biggest risers as Ryanair’s pilot shortage and the demise of competitor Monarch paved the way for a strong first quarter for the budget airline.

The company reported a 14.4% rise in revenue to £1.14 billion over the three months to December 31, driven by a 8% jump in passenger numbers to 18.8 million.

Shares rose 5%, or 80p to 1,643.5p, with the group reporting total revenue per seat growing 6.6% at constant currency.

Investors were also tuning in to Sky, with the broadcasting giant enjoying gains on the London market despite Rupert Murdoch’s £11.7 billion takeover bid being provisionally blocked by the competition watchdog.

The Competition and Markets Authority (CMA) said it found that 21st Century Fox’s deal to buy out the remaining 61% of Sky it does not already own was “not in the public interest”.

Its investigation found if the deal went ahead, it would hand the Murdoch Family Trust – which controls Fox and News Corp, the publisher of the Sun and the Times – “too much control over news providers in the UK across all media platforms… and therefore too much influence over public opinion and the political agenda”.

Shares in Sky were up 23p to 1,026p.

On the second tier, retailer Pets at Home surged as its growing raft of grooming and vet services helped drive third-quarter revenues up 9.6%.

The specialist retailer said revenues totalled £223.3 million for the 12 weeks to January 4, following a 13.6% jump in its services business to £29.9 million.

That includes a 19.3% rise in income from its its joint venture vet practice to £12.1 million for the period.

The firm was up 10.8p to 192.8p.

The biggest risers on the FTSE 100 Index were easyJet up 80p to 1,643.5p, NMC Health up 100p to 3,460p, Croda International up 128p to 4,597p, Mediclinic International up 16.2p to 625.8p.

The biggest fallers were Frensillo down 58.5p to 1,335p, Evraz down 15.6p to 379.8p, Anglo American down 69.2p to 1,723p, Glencore down 11.7p to 390.8p.

Press Association

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