Belfast Telegraph

Pound soars as traders bet on Tory majority

The FTSE 100 rose by 29.74 points, or 0.42% to 7188.5, after positive signals on US-China trade relations.

Traders believe that Boris Johnson might win a majority in next week’s elections. (Stefan Rousseau/PA)
Traders believe that Boris Johnson might win a majority in next week’s elections. (Stefan Rousseau/PA)

By August Graham, PA City Reporter

Currency traders have been betting on a Conservative win in next week’s election, sending the pound to its highest level against the euro in two-and-a-half years.

Sterling rose to 1.1812 against the European currency, after hitting highs of 1.1826 earlier on Wednesday. It was 0.77% up on the day. Against the US dollar, the currency rose by 0.75% to 1.3091.

Michael Hewson, an analyst at CMC Markets, said that the currency was buoyed as traders think that the Conservatives will win a majority.

“The pound has broken out, trading at its highest levels against the euro since May 2017, while also breaking higher against the US dollar on diminishing expectations that the Labour party will be able to get close enough in the polls to deny the Conservatives a majority next week,” he said.

Bloomberg chucked the markets a lifeline on Wednesday, revealing that a ‘phase one’ trade deal is very much still on despite the various obstacles that have emerged in the last week or so. Connor Campbell, SpreadEx

He added: “Given the experience of 2017 this seems a little premature, however short positions are getting squeezed hard, and this is helping pull the pound higher.”

Meanwhile, the FTSE 100 broke through the constraints normally placed on it by a soaring pound, as it rose by 29.74 points, or 0.42%, to 7188.5. The export-heavy index is often pulled lower when the pound rises, however optimistic signals on China-US trade talks cut through that.

“Bloomberg chucked the markets a lifeline on Wednesday, revealing that a ‘phase one’ trade deal is very much still on despite the various obstacles that have emerged in the last week or so,” said Connor Campbell, an analyst at SpreadEx.

The news was more of a boost to France’s Cac index, which rose 1.27% to 5,800. Germany’s Dax hit 13,138, up 1.16%.

Oil prices also rose, with Brent crude up 3.74% to 63.28 dollars per barrel as Opec meets. Experts think the cartel of oil-producing countries could slash output in a bid to press up prices.

In company news, M&G Investments has suspended trading in its £2.5 billion property fund after a rush of investors sought to cash out amid Brexit uncertainty.

The FTSE 100 firm said it saw “high and sustained outflows” after the fund was hit by “Brexit-related political uncertainty and ongoing structural shifts in the UK retail sector”.

Advertising agency M&C Saatchi has warned over profits for the second time in three months after being hit by higher costs and a weak performance in the final quarter.

The UK-based firm, which launched an internal review into the accounts of its UK subsidiaries in August, also said it would restructure its UK business in a bid to improve performance.

Bosses at fashion chain Quiz have blamed economic uncertainty and shoppers spending less on the high street as it sunk into the red.

The retailer added that even though actions to address the poor performance are under way, a number of stores will continue to be loss-making.

Cafe-bar operator Loungers has said it sees the potential to more than triple in size after posting surging sales on the back of new restaurant openings.

The biggest risers on the FTSE 100 were Meggitt, up 21.4p to 640.20p, Evraz, up 11.8p to 357.20p, DS Smith, up 10.6p to 378.90p, Hargreaves Lansdown, up 50.5p to 1,808.50p, and Ocado, up 34p to 1,228.00p.

The biggest fallers on the FTSE 100 were Fresnillo, down 37.2p to 545.40p, M&G, down 6.2p to 224.80p, Morrison, down 2.75p to 192.80p, Sage Group, down 9.8p to 722.20p, and Smith & Nephew, down 21p to 1,661.00p.

PA

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