Pound jumps on possible Brexit delay
Sterling gained 0.7% against the dollar, reaching $1.2842 during the afternoon session after the Evening Standard put out a story claiming that Brexit was on course to be delayed.
According to the paper, a number of Cabinet and senior ministers now take the view that an extension to the timetable for the UK’s exit from the European Union is inevitable.
The rally in sterling caused the FTSE 100 to fall. This happened because the index is largely made up of companies that derive their earnings overseas and therefore benefit from a weaker pound.
At the time of writing, the FTSE 100 was down 0.4%, trading at 6,919 points, up from a low of 6,906 reached earlier in the afternoon.
It was certainly a day of two halves. During the morning, the index breached the psychological 7,000 mark, buoyed by news from the US after Federal Reserve chair Jerome Powell hinted that the central bank would take a break from further interest rate rises for the time being.
This preceded the news that UK economic growth slowed to 0.3% over the three months to November. This compares to 0.6% over the three months to September.