Sterling has topsy turvy day as Brexit papers unleashed on markets
The pound was subject to another day of volatility as currency traders digested a flurry of reports that detailed the impact of a hard Brexit.
Sterling made gains early in the day before dipping, and then rose again following the market close, just as the Bank of England released a doomsday Brexit assessment.
The pound was up 0.5% versus the US dollar to 1.280 US dollars and flat against the euro at 1.12 in evening trade.
It came after the Bank warned that the pound would crash, inflation soar, interest rates would have to rise and Britain’s growth would plummet in the event of a no-deal disorderly Brexit.
The apocalyptic outcome, contained in the Bank’s analysis of various EU withdrawal scenarios, would also see unemployment skyrocket.
Earlier in the day, the Government released its own Brexit impact assessment, which found that withdrawal from the EU under Theresa May’s plans could cut the UK’s GDP by up to 3.9% over the next 15 years.
But leaving without a deal could deliver a 9.3% hit to GDP over the same period and the UK will be poorer in economic terms under any version of Brexit, compared with staying in the EU.
The FTSE 100, meanwhile, closed down 12.33 points, or 0.18%, at 7,004.52.
In stocks, shares in the Restaurant Group took a hammering after the firm clinched approval for its controversial takeover of the Wagamama chain, despite a significant level of opposition from shareholders.
The full results showed just under 61% of shareholders supported the £559 million deal, which will be paid for through a combination of a £315 million rights issue and a £220 million revolving credit facility.
The Restaurant Group – which is also behind Frankie & Benny’s and Garfunkel’s – said it would engage with investors to address their concerns.
However, this fell on deaf ears as sceptical investors sent shares down 35.5p, or 15.1%, to 199.5p at the close.
Shares in Telford Homes were on the rise despite the housebuilder warning it still has “work to do” to meet its full-year profit targets, adding that Brexit has added further uncertainty to its ability to hit forecasts.
The London-focused group said it has just under 60 house sales to achieve, of which 20 are priced above £600,000 – the price bracket that has been hardest hit by Brexit worries.
While this is down from 90 homes left to sell in October, the group is concerned over buyer demand amid mounting uncertainty about Brexit.
Nevertheless, the company’s stock was up 10.5p at 310p.
In Europe, Germany’s DAX was down 0.09% while France’s CAC 40 was flat.
A barrel of Brent crude was trading at 60 US dollars, a decline of over 1%.
The biggest risers on the FTSE 100 were Antofagasta up 27.8p at 806.4p, Ocado up 17.4p at 833.4p, Just Eat up 11p at 589p and Ferguson up 90p at 4,907p.
The biggest fallers on the FTSE 100 were easyJet down 59.5p at 1.159.5p, Persimmon down 99p at 2,014p, Taylor Wimpey down 6.2p at 141.4p and IAG down 24.6p at 632.4p.