Sterling and equities rise on Brexit breakthrough hopes
Markets have been reaching new heights (pic: Terry Murden)
Sterling and equities received a long-awaited boost today from hopes of a breakthrough in the Brexit talks.
The FTSE 100 closed up 60.7 points (0.84%) at 7,247, with Lloyds Banking Group the biggest riser, up 12.2% as domestic companies enjoyed a pick-me-up from weeks of gloom.
Royal Bank of Scotland (up 11.4%) and the builders Persimmon and Barratt were other big risers, driving the UK-focused FTSE 250 up more than 4.2%.
Sterling enjoyed its best two days since 2017 and a three month high against the US dollar, up more than 1.7%.
Dean Turner, economist at UBS Wealth Management said sterling investors will be “cheered” but recommended they remain “nimble” in view of the continuing uncertainty that a Brexit deal will be reached.
“An extension followed by a call for a general election is still the most likely outcome, in our view, and we would expect to see sterling trade between 1.25-1.29 against the dollar,” he said.
“However the possibility of a deal has undoubtedly increased, which could further prolong sterling’s rally. In our view, a benign deal could see £/$ rallying to 1.35 and €/£ dropping into the low 0.80s.
“Clarity will be key, as we await further details on what the Prime Minister has agreed (if anything) and whether it stands a fighting chance of getting through parliament.”