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Sterling hits five-week low as Brexit fears bite back

Published 23/09/2016

The FTSE 100 closed two points lower at 6909.4 points
The FTSE 100 closed two points lower at 6909.4 points

Sterling hit five-week lows on Friday, with renewed Brexit fears and a stronger US dollar taking a bite out of the pound.

The UK currency fell by as much as 0.9% against the US dollar, dropping to 1.296 against the greenback.

The pound fell over 1% against the euro to hit 1.154.

Meanwhile, the FTSE 100 failed to find direction, closing two points lower at 6909.4 points.

Sterling was the biggest loser on the currency markets, as post-referendum jitters returned to the market.

Jasper Lawler, a market analyst at CMC markets said comments from UK foreign secretary Boris Johnson "rekindled Brexit fears".

Mr Johnson told Sky News on Thursday that there was an expectation that Article 50 would be triggered in early 2017.

"On the three-month anniversary of the Brexit referendum, it looks like there is still not a lot of love for the pound and this reflects a lack of confidence in the UK economic outlook," ETX Capital markets analyst Neil Wilson said.

"A report from Citi that highlighted waning inflation expectations also seems to be weighing on sentiment," Mr Wilson said.

A strengthening dollar in the wake of the US Federal Reserve's decision to stand pat on interest rates earlier this week also helped to knock sterling off its feet.

Across Europe, the German Dax fell 0.4% while the French Cac 40 dropped 0.5%.

In oil markets, Brent crude plunged 2.2% to 46.37 US dollars per barrel as investor hopes of a deal between oil producers at the sidelines of an upcoming International Energy Forum waned.

Shares in Anglo American topped the FTSE 100, rising 3.3% or 30.5p to 951p, following the appointment of Stephen Pearce as finance director.

Mr Pearce will replace Anglo's retiring chief financial officer Rene Medori, after serving as chief financial officer of Australian iron ore producer Fortescue Metals Group.

Russian gold miner Polymetals was the biggest loser on the top tier index, dropping 7.4% or 78p to 981p, after two major shareholders sold a £253.5 million stake in the company.

Away from the top tier index, Sports Direct shares surged 5.5% or 15.9p to 302.8p.

The company announced that b illionaire founder Mike Ashley will step in as chief executive, taking the reins from long standing boss Dave Forsey, who resigned from the firm on Friday.

The news comes after a gruelling year for the business, which has seen Sports Direct come under fire for working conditions at its Shirebrook factory and its corporate governance practices.

The biggest gainers on the FTSE 100 were Anglo American, up 30.5p to 951p, Ashtead Group, up 32p to 1230, Persimmon, up 41p to 1838p, and Barratt Development, up 10.2p at 497.2p.

The biggest losers on the FTSE 100 were Polymetal International, down 78p to 981p, ITV, down 7.5p to 186.7p, BAE Systems, down 13p to 524.5p, and Royal Bank of Scotland Group (RBS), down 3.9p to 182.6p.

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