Belfast Telegraph

Sterling gives dollar a pounding after poor US economic data

Sterling surged to nine-week highs against the dollar after the greenback was hit by unexpectedly poor US economic data on Tuesday.

The pound rose rose as high as 1.344 against the US currency after fresh data showed that the American service sector grew at its slowest pace since 2010.

Neil Wilson, m arkets analyst at ETX Capital, said: "Although today's jump seems to be a story of dollar softness, there is a better vibe around sterling after a batch of fairly upbeat PMI readings over the last few sessions."

The US data weighed on global stocks including the FTSE 100, which closed 53.3 points or 0.78% lower, at 6826.05 points.

The US numbers contrast with UK data released on Monday, which showed the services sector swinging back to growth in August after a contraction in July.

The news prompted major US banks including Morgan Stanley and JP Morgan to upgrade their economic expectations for the UK, after cutting their forecasts for Britain in the wake of the Brexit vote.

Those upgrades added further buoyancy to sterling exchange rates.

The pound was trading 0.1% higher at 1.194 against the euro.

Across Europe, Germany's Dax finished 0.1% higher, while France's Cac 40 ended the day 0.26% lower.

In oil markets, Brent crude was trading lower by around 1.3% at 46.82 US dollars per barrel as hopes over a potential supply freeze waned. It comes after oil prices hit a one-week high on Monday as Saudi Arabia and Russia said they would cooperate to support crude prices.

Housebuilders Berkeley and Redrow were the biggest risers on the FTSE 100 and FTSE 250, respectively, after releasing financial results on Tuesday.

Berkeley was the best performer on the top tier index, rising 92.8p to 2782.8p after reassuring investors that trading had stabilised after Brexit turbulence, despite having reported a 20% fall in property sales in August.

Berkeley said there had been a spike in cancellations following the UK's vote to quit the European Union, but said these had now returned to normal.

Redrow closed higher by 6.4% or 23.9p at 408.2p after posting another set of record annual results. The company brushed aside fears over Brexit negotiations to predict another "excellent" year for the property market in 2017.

The Flintshire-based firm reported a 23% surge in pre-tax profits to £250 million for the year to June 30 after revenues rose 20% to £1.38 billion, with average selling prices of homes up 7% to £288,600.

Berkeley and Redrow buoyed the share prices of fellow house builders, including Barratt Developments which closed higher by 8.6p to 507p, and Persimmon which rose 33.7p to 1871.7p.

Sports Direct was also one of the biggest risers on the FTSE 250, rising 19.6p or 5.9% to 351.9p, after announcing it would offer its casual retail staff guaranteed hours instead of zero-hours contracts. It also said it would ensure all warehouse staff are paid above the National Minimum Wage following a review into working practices at the retailer.

The biggest risers on the FTSE 100 were Berkeley Group up 92.8p to 2782.8p, Persimmon up 33.7p to 1871.7p, Mondi up 28.2p to 1587.2p, and Barratt Developments up 8.6p to 507p.

The biggest fallers on the top-tier index were big banks including HSBC down 13.2p to 568.4p, Barclays down 3.6p to 169.7p , Standard Chartered down 11.7p to 646.8p, and oil major Royal Dutch Shell down 33.1p to 1857.4p.