Sterling has continued its strong start to the week this morning, moving above yesterday’s highs against the US dollar, euro and Japanese yen. The UK stock market is slightly softer, lower by 8 points, with mining stocks in particular suffering a fair size sell-off.
GBP continues to pare losses
Whilst the pound remains well below its pre-Brexit levels, a sense of calm has been restored to the currency in recent weeks, allowing it to move off its multi-year lows. Against its most widely traded cross - the US dollar - sterling has moved higher once more, and now trades less than 100 ticks from where it was prior to the Bank of England decision to cut rates into unprecedented territory earlier this month.
With the uncertainty surrounding the Brexit still looming overhead and the triggering of article 50 expected in the not too distant future, it’s hard to build too strong a fundamental case for a sustained rally in the pound, but with short positioning remaining extreme there is likely to be more of a two-way trade rather than just a continued depreciation going forward.
Strong results see WPP rally
The best performing stock on the FTSE 100 this morning is WPP (LON:WPP), after the world’s largest advertising group released a trading update before the market open. The stock of WPP has risen by approximately 6% so far, after posting an 11.9% increase in revenue for the fiscal first half and despite warnings from CEO Sir Martin Sorrell that he is still worried about the Brexit. An upward revision to forecasts for turnover has outweighed these concerns in the short-term.
Housebuilders, Barratt Developments (LON:BDEV), Persimmon (LON:PSN) and Taylor Wimpey (LON:TW) have also built on yesterday’s gains and are all near the top of the index. Mining stocks are the laggards so far, with Glencore (LON:GLEN), Anglo American (LON:AAL) and Rio Tinto (LON:RIO) all firmly in the red at the time of writing.