The FTSE 100 is handing back some of its recent gains today with the benchmark lower by almost 40 points at the time of writing. After surging higher at the start of the week this move could be down to some profit taking whilst the continued appreciation of the pound is weighing on the blue-chips.
Another leg higher in the pound?
Since a strong move higher last Tuesday on the calling of a snap election, the pound has been consolidating around its highs but this morning the currency is attempting to make another thrust higher. Sterling has moved back above the 1.29 level against the US dollar this morning to post a fresh 5-month high and the bulls appear to be attempting to drive prices back above the 1.30 handle in the coming sessions. Recent polls that suggest support for Theresa May is the highest of any PM in the past 40 years have added more weight to the notion that the General Election in six weeks time will be a landslide and afford her greater political power when negotiating the Brexit terms with Europe.
Lloyds (LON:LLOY) follows suit in beating on earnings
One of the best performing stocks on the FTSE 100 is Lloyds Bank which has risen by almost 4% after posting a near doubling of first-quarter profits. A pre-tax earnings figure for Q1 of £1.3bn marks a 99% rise on last year’s equivalent and the results are all the more impressive considering that the bank was forced to set aside a further £450m for the PPI mis-selling and HBOS scandal. The release also included an upgrade to its profit guidance for 2017 estimating that its net interest margin would improve to 2.8% from the 2.7% previously forecasted. The results follow a positive earnings release from Standard Chartered (LON:STAN) yesterday and now investors will be looking forward to tomorrow’s numbers from Barclays (LON:BARC) and RBS (LON:RBS) in a more optimistic mood. If there is further positivity in these reports then the signs of strength will increase and after many years of problems the path ahead is starting to look a whole lot rosier for the banking sector.