Despite the intense media scrutiny on this week’s Brexit developments, the markets seem to have seen through the noise and traded in a relatively subdued manner. This shouldn’t really come as much of a surprise as the triggering of Article 50 has long been touted for this week and there were no real shocks in the comments from either party. The FTSE 100 is lower by 37 points on the day, but remains close to last week’s closing level after recovering from a soft start on Monday. The pound is also looking like it will close not far from last week’s levels, although it is a little higher on a trade weighted basis and the fact it hasn’t sold this week could reveal some underlying strength in the currency.
UK economy grew 1.8% last year
This morning saw the final GDP figures for last year released with a 0.7% increase seen in Q4. Overall this means that the 2016 GDP figure is a respectable 1.8% and the level of economic activity remains a comfortable distance from a recession. Even though this data is lagging it confirms the now widely-held belief that there has been little sign of any significant slowdown in the economy since the EU referendum last summer. With this week seeing Brexit become a reality the real work will begin with the terms of the separation and future trade deals set to be negotiated in the coming years. Taking a step back and looking at the long run April has historically been a good month for the pound and this seasonality, coupled with high levels of speculative shorts, could well see sterling attempt to recover some of the ground lost in the past nine months.
Miners drag FTSE lower
Today’s declines seen in the FTSE 100 are largely due to some fairly strong selling that has been seen in the mining sector with Anglo American (LON:AAL), Fresnillo (LON:FRES) and Rio Tinto (LON:RIO) all firmly lower on the day. However the worst performing stock is Old Mutual with the insurance company seeing a decline close to 7% as the political uncertainty in South Africa wrangles on. After days of speculation the country’s finance minister, Pravin Gordhan, has been sacked and the Rand has fallen to its lowest level against the US dollar in 2 months.