FTSE Rallies on FTSE Breakthrough
UK shares have underperformed compared to their European peers, after a rally fuelled by a breakthrough in the Brexit talks helped to boost the pound during early trade. Fortunately for the FTSE 100, the pound shed those gains later in the morning.
The FTSE 100 was up by 0.27 percent by 9:45, but the European STOXX was up by 0.86 percent by that point, and other European bourses were trading in positive territory too.
The pound starting strong had a dampening effect on the FTSE 100, however the sterling’s immediate impact on shares does not detract from the fact that the progress in the Brexit negotiations will be good news for the UK economy in the long run.
The sterling has fallen since the Brexit vote, and typically a weak pound helps to support the FTSE 100. The FTSE 250, which is a smaller and more domestically focused index, typically earns less of its revenues overseas, so it benefited more from the news than the FTSE 100, gaining 0.37 percent.
Financials were some of the best performers of the day. New global banking regulations have been announced, and the regulations were perceived as being kinder to European banks than had initially been feared. Citi analysts said that the banks will now be able to quantify excess capital and M&A budgets. Lloyds and Barclays were some of the best performers in the sector, gaining 4 percent and 3 percent respectively, while RBS is up by 1.6 percent.
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