Pound falls as Brexit talks break up without deal
The pound was in the red against the US dollar at around 1.34.
Excitement over progress in Brexit talks was short-lived, with the pound giving back gains after a meeting in Brussels broke up without delivering a deal.
Sterling fell into the red against the US dollar, down nearly 0.1% at 1.345, having traded as high as 1.353 in the early afternoon. Versus the euro, the pound was up just 0.3% at 1.135.
In contrast, the FTSE 100 ended the day up 0.53% or 38.48 points at 7338.97.
The UK currency was knocked after a proposed solution for the Irish border was scuppered by fierce resistance from Northern Ireland’s Democratic Unionist Party (DUP).
It was hoped that an agreement would pave the way for much-anticipated trade talks between the UK and EU.
David Madden, chief market analyst at CMC Markets UK, said the pound suffered a “choppy day”, having slipped back in the afternoon “as it became apparent that there would be no deal today”.
He added: “However, the tone of the May/Juncker press statement would appear to suggest that a deal could well be reached by the EU Summit next week, or before that if DUP concerns can be addressed, assuming that is where the deadlock is, which seems likely.”
Investors were also digesting fresh data showing better-than-expected growth in the UK’s construction industry.
The Markit/CIPS UK Construction purchasing managers’ index (PMI) showed a reading of 53.1 last month, up from 50.8 in October and easily beating economists’ forecasts for 51.0.
It was the highest reading in five months, with house building projects again emerging as the “primary growth engine” for industry activity.
Across Europe, the French Cac 40 jumped 1.36% while the German Dax tumbled 0.42%.
In oil markets, Brent crude prices dropped more than 1% to $62.92 per barrel, as investors reacted to a jump in the US oil rig count, which hit its highest level since September, according to data released by Baker Hughes.
In UK stocks, Sky jumped 26p to 956p amid reports that Disney has been eyeing a raft of 21st Century Fox assets including its 39% stake in Sky.
SSE was nearly flat, down 1p at 1,337p as the chair of the Business, Energy and Industrial Strategy (BEIS) Committee called on the Competition & Markets Authority (CMA) to investigate the merger between SSE and the owner of Npower, amid fears that the deal will spell bad news for energy consumers.
Shares in McColl’s Retail Group tumbled 15p to 275p, despite recording annual revenue of over £1 billion for the first time, thanks in part to its acquisition of 298 Co-Op stores.
However, like-for-like fourth quarter sales fell 1.1%, with McColl’s saying that “declining traditional categories and unfavourable weather” had negatively impacted the business.
Pendragon rose 0.75p to 26p on news that the car firm was set to shut dealerships in Britain and offload its US division following a strategic review of the business.
The company said it will instead focus on the used car market, where it trades as Evans Halshaw.
The biggest risers on the FTSE 100 were Carnival up 167p at 4,931p, Sky up 26p at 956p, Ashtead Group up 50p to 1,954p, and Barclays up 4.85p at 194.25p.
The biggest fallers on the FTSE 100 were Fresnillo down 35p at 1,273p, Randgold Resources down 85p to 6,800p, Mondi down 21p to 1,719p, and NMC Health down 30p to 2,818p.