Despite some indecision following the Supreme Court ruling yesterday, the pound has continued to rally this morning hitting a 5-week high against the US dollar. The FTSE 100 is also in the green, but is lagging behind its European counterparts with a rise of 18 points meagre compared to the 100 point rally seen on the German bourse.
Cable tests 1.26 handle
Since Theresa May gave her speech on the government’s objectives when it comes to Brexit negotiations last Tuesday, sterling has soared higher by more than 500 pips against the US dollar. The British currency has endured a torrid time since the EU referendum but there is a case to be made for the depreciation being overdone and with the GBPUSD holding above its flash crash lows, the market is now looking to recover. However, from a longer term perspective the trend remains down and from a technical perspective the price needs to recapture the 1.28 level before a sustained move higher can occur. Fundamentally speaking little has changed to support the pound and whilst Theresa May has outlined her aims, many consider these to verge on the over ambitious and there remains severe potential headwinds to the currency going forward.
US stocks hit record highs
The FTSE100 is enjoying a boost in global sentiment today with stock markets on the continent and across the Atlantic rallying higher. The German Dax 30 hit its highest level of the year this morning after yesterday US stocks resumed their rally with the S&P500 posting another all-time high. Shares in London are lagging somewhat due to the rise in the pound, but they are in positive territory and looking to reclaim recent losses. Ashtead Group (LON:AHT) is leading the way and higher by more than 3% with Miners offering able support after BHP Billiton (LON:BLT) lifted the entire sector following the release of a positive trading statement. BT is in the green but the 1.5% gain pales in significance when compared to Tuesday’s sharp sell-off of more than 15%. Gold prices reversed from their highest level in 9 weeks yesterday and the decline in the precious metal can be seen in Fresnillo (LON:FRES) and Randgold Resources (LON:RRS) with both stocks declining by approximately 3% today.