Monday 17 June 2019

Weaker UK economic growth figures hit sterling

The FTSE 100 closed at 7,375.54.

The state of the UK economy pushed the pound into the red on Monday (PA)
The state of the UK economy pushed the pound into the red on Monday (PA)

By Press Association City Staff

The pound was in the doldrums on Monday after a disappointing set of numbers on the UK’s economic growth.

Sterling was still down 0.44% against the US dollar at 1.268 by the end of the day, having dropped after the release of April’s GDP numbers. The currency also slumped 0.12% to 1.121 euros.

The latest figures showed a slump in car manufacturing as several plants brought forward annual shutdowns to April, coinciding with the original Brexit deadline.

The slew of candidates for the Conservative Party leadership formally launched their campaigns on Monday, with some analysts eyeing the race as another potential source of volatility.

Sebastian Clements, currency analyst at OFX, said: “The strength of the British currency is currently in limbo due to the uncertainty surrounding the future of UK politics.

“With hardline Brexiteer, Boris Johnson, currently out in front in the race to become prime minister, Sterling is vulnerable as analysts predict GBP/USD may drop to as low as 1.24 dollars in the face of a leader who favours a no-deal Brexit.”

The weakening pound gave strength to top shares in London, as did a more upbeat outlook for global trade as Mexico and the US agreed a truce.

The FTSE 100 gained 43.6 points to close 0.59% higher at 7,375.54.

Fiona Cincotta, senior market analyst at City Index, said: “Mexico agreeing to beef up security on the border with the US has placated Trump and removed the risk of trade tariffs. Markets across Europe have reacted positively to the news. Wall Street also opened sharply higher, extending last week’s Fed inspired rally.”

But the news was not enough to boost oil prices, with US-China relations still threatening to hurt demand.

A barrel of Brent Crude oil was trading at 62.74 US dollars, down 0.85%.

In London, Ocado shares climbed 52p to 1,165p after it announced a pair of major investment deals to expand into vertical farming.

The retail technology firm has bought a majority stake in Scunthorpe-based Jones Food Company, Europe’s largest operating vertical farm.

It has also entered a three-way joint venture called Infinite Acres with 80 Acre Farms and Priva Holdings to create technology solutions for companies in the fast-growing vertical farming industry.

Cash-strapped travel firm Thomas Cook confirmed that it is in talks with Chinese conglomerate Fosun regarding the potential sale of its tour operator business.

Its shares took off following the news, climbing 2.75p to 18.86p.

Shares plunged by 96p to 790p at MJ Gleeson after the housebuilder’s chief Jolyon Harrison executive stepped down amid a boardroom row over his pay.

Plumbing products supplier Ferguson saw shares slide 248p to 5,100p after the FTSE 100 firm reported third quarter revenues below estimates after growth slowed in the US.

The biggest risers on the FTSE 100 were Ocado up 52p to 1,165p, Antofagasta up 29.4p to 834.4p, NMC Health up 68p to 2,268p and Evraz up 16p to 649p.

The biggest fallers on the FTSE 100 were Ferguson down 248p to 5,100p, Fresnillo down 22.2p to 789.8p, Next down 138p to 5,578p and Imperial Brands down 32.5p to 2,040.5p.

Press Association

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