Pound jumps higher as traders welcome Brexit Party withdrawal from seats
The resurgent pound jumped higher against the euro and dollar as traders welcomed news that the Brexit Party will not contest previously Conservative-held seats in the upcoming General Election.
Currency traders were optimistic on Monday that Nigel Farage’s decision to stand down some Brexit Party candidates could reduce the likelihood of a hung parliament.
The value of the pound increased 0.6% versus the US dollar at 1.286, and up 0.42% against the euro at 1.165.
Sterling’s bounce came after a steady improvement in recent months as investors hope for Brexit certainty, pulling the pound up to a six-month high against the euro.
Connor Campbell, financial analyst at Spreadex, said: “Sterling’s hero came in an unlikely form on Monday: The Brexit Party.
“Nigel Farage announced that his single-issue group would not contest the 317 seats the Tories won back in 2017. Investors have read this move as one that makes it easier for Boris Johnson to secure a majority.”
Political news drove the change in the value of the pound, as it was left largely unaffected by a mixed set of GDP figures.
Improvements in sterling weighed down international-focused blue-chip companies, while UK-oriented firms, such as banks, were lifted by the currency swing.
The FTSE 100 closed 30.84 points lower at 7,328.54 at the end of trading on Monday.
Global stock markets were largely weaker on concerns over the US-China trading relationship amid violence in Hong Kong, sending the Dow Jones lower in early trading.
David Madden, market analyst at CMC Markets UK, said: “Global equities rallied last week as progress was made in relation to the US-China trade discussions, but since then the situation doesn’t look as rosy.”
In Europe, trading was subdued but ebbed lower in Germany due to fears around global trade.
The German Dax decreased by 0.23% while the French Cac moved 0.7% higher.
In company news, high street baker Greggs soared after it revealed that sales jumped in the last six weeks, meaning profits are now expected to be higher than first thought.
Bosses had previously been concerned that supplies and sales could take a hit from the UK leaving the EU on October 31, with potential delays to imports.
But with an extension agreed, those concerns have now been allayed. Shares in the company closed 293p higher at 2,064p.
Shares in funeral provider Dignity improved despite the company revealing its profits this year have been dented by falling death figures.
However, shares in the business still closed up 34.5p at 552p.
Troubled miner Sirius Minerals saw shares lift after it revealed a cheaper plan to start production at its North Yorkshire mine.
Shares in the company closed up 0.27p at 3.47p at the close of play.
The price of oil was subdued on Monday, edging lower, as traders remain cautious of the state of trade relations between the US and China.
The price of a barrel of Brent crude oil decreased by 0.67% to 62.22 US dollars.
The biggest risers on the FTSE 100 were RBS, up 8.6p at 221.6p, Lloyds Group, up 2.26p at 58.54p, Persimmon, up 92p at 2,450p, and Barclays, up 5.2p at 171.64p.
The biggest fallers on the index were Ocado, down 87.5p at 1,102p, Evraz, down 19.8p at 351p, Rolls-Royce, down 37.1p at 739.6p, and Hiscox, down 56p at 1,213p.