Sterling steadies but Brexit still weighing on British currency
Liam Fox had once claimed a deal with the EU would be the ‘easiest in human history’.
Sterling regained a modicum of poise on Thursday but fears of a no-deal Brexit continue to spook currency traders.
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The pound remained firmly in the doldrums, losing around 0.2% versus the dollar to leave it at 1.286, its lowest level for almost a year.
But it signalled a marginal comeback on the day, when sterling was trading even lower.
Against the euro, the pound hit a nine-month low as it edged down to 1.10 euros before regaining ground at 1.112.
David Madden, market analyst at CMC, said: “When you consider how much ground the pound has lost in recent sessions, today’s upward move is tiny – this highlights the negative sentiment surrounding the pound.
“Currency traders are terrified of the prospect of the UK leaving the EU without a trade deal.”
The pound’s woes come after Trade Secretary Liam Fox said over the weekend that the chances of the UK leaving the EU without an agreement in place is becoming more of a reality.
Contrary to his comments last year, when Mr Fox claimed a deal with the EU would be the “easiest in human history”, he now believes that a no-deal Brexit is more likely than an agreed withdrawal, putting the odds at “60-40”.
His comments echoed those of Bank of England Governor Mark Carney last week.
Sterling is likely to plummet further if fears of “no deal” materialise, something analysts believe is a real possibility.
The FTSE 100, meanwhile, was also on the back foot, dropping 34.88 points, or 0.45%, to close at 7,741.77.
London’s top flight was dragged down by tour operator Tui, which suffered a double-digit drop in third-quarter earnings and said summer bookings were unlikely to outperform due to the recent heatwave.
The company saw underlying earnings for the three months to June 30 slump 18% to 193.4 million euro (£174 million), having been hit by currency fluctuations and the earlier timing of Easter. Shares ended down 40p at 1,542.5p.
On the FTSE 250, G4S also took a battering, ending 21.9p down at 260.1p. It came after the outsourcer reported a 36% drop in profits on the back of a raft of disposals.
Card Factory shares also tumbled after the retailer slashed its profit guidance on the back of extreme weather and weak consumer demand.
The greeting cards and gifts retailer said it now expects full-year underlying earnings to come in between £89 million and £91 million, compared with previous forecasts of £93.5 million. Shares were down 22.7p at 188.1p at the end of the session.
Across Europe, Germany’s DAX was up 0.34% and France’s CAC was up 0.01%.
Brent Crude was trading flat at 72.1 US dollars per barrel.
The biggest risers on the FTSE 100 were Fresnillo up 24.4p at 1,022p, Hargreaves Lansdown up 47p at 2,122p, InterContinental up 87p at 4,734p and Rangold up 100p at 5,598p.
The biggest fallers on the FTSE 100 were BT Group down 11p at 229p, Direct Line down 8.6p at 325.6p, Tui down 40p at 1,542.5p and CRH down 65p at 2,539p.