The pound is trading lower this morning and looking vulnerable to further declines. The slide in sterling is aiding the FTSE 100 which has enjoyed a strong move higher since the open, currently trading up by 45 points despite a precipitous drop seen in Provident Financial (LON:PFG).
Pound hits 10-month low against the euro
For much of 2017 the narrative surrounding the pound has been one of an unexpected recovery despite the continued political turmoil seen in the UK. However the currency has come back under pressure in recent weeks with the US dollar moving away from multi-year lows and the euro on the rise. The GBPUSD is currently sat around its lowest level of the week and testing a fairly important technical support level. Should buyers fail to step in and support the price around here then a 200-250 pip decline could well be in the offing which would see the pair fall to its post-election lows around the 1.26 handle. The GBPEUR exchange rate has been steadily in decline of late and today has fallen once more to make another lower low and trade down to levels not seen since the flash-crash in sterling last October.
Provident Financial plummets on trio of bad news
Subprime lender Provident Financial is having its worst ever day on the stock market with shares currently lower by more than 60%. Price has plummeted after three negative announcements have raised serious concerns about the firm’s future prospects. The Bradford-based company suspended dividend payments whilst issuing its second profit warning in just 3 months after stating that its doorstep lending business had significantly deteriorated. CEO Peter Cook completed the hat-trick of negative news when he announced his resignation, causing investors to rush for the exit doors of a stock that had previously been a favourite amongst some of the top asset managers in the UK. The crux of the decline in profitability comes from a substantial drop in collections performance which has now fallen to just 57% from 90% last year. The rapid drop in the share price to below 700 will test the resolve of even the most ardent investor, with stock having changed hands above 3000 per share as recently as May.