Sterling remained the headline story as Tuesday progressed, with the UK’s strengthening wage growth picture, and a reversal of Monday’s Brexit migraine, sending the currency sharply higher.
The best average earnings index reading (excluding bonuses) for a decade primed the pound for a good day this morning. However, it only really let rip after news of ‘optimism on both sides’ over a Brexit deal began to filter through the markets, with Downing Street claiming there are just a ‘small number of outstanding issues’ left to resolve.
Now, it is worth saying, we have been here before. Sterling is so sensitive to any Brexit news at the moment that it doesn’t take a lot for it to bust out some serious movement. Nevertheless, move it did, climbing 0.8% against the dollar, allowing cable to re-cross $1.295, while rising 0.6% against the euro, where it has returned to €1.15.
This effectively ruined the FTSE's day. Well, that and a nasty downturn from its commodity stocks, with BP (LON:BP) and Shell (LON:RDSa) falling 3.6% and 2.6% respectively and the miners shedding anywhere between 1.5% and 2.5%. That left the UK index at a 0.3% loss, tumbling back to 7030 having struck 7100 earlier in the session.
Elsewhere things were mixed. The eurozone broadly held onto the day’s growth, the DAX and CAC up 0.5% and 0.2% respectively despite no sign that the budget tussle between Italy and Brussels is going to end any time soon.
The Dow Jones, on the other hand, couldn’t keep its promise of a 150 point rise once the bell rang on Wall Street, instead dropping 0.4% to sink below 25300.
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