Brexit talks breakthrough sees market bounce back

London’s top-flight index rebounded yesterday and sterling gave up its gains as Prime Minister Theresa May overcame a major barrier in the Brexit negotiations.

The FTSE 100 Index rallied back from falls in the previous session – surging 73.21 points to 7393.96 - as investors responded to the announcement that Britain will pay a “divorce bill” of up to £39 billion under the withdrawal package agreed with Brussels.

The breakthrough was hailed by the Prime Minister as “a hard-won agreement in all our interests”, with the European Commission clearing the way for negotiations on the EU’s future relationship with the UK.

Sterling was trading higher in the morning session, but was down 0.7% versus both the US dollar and the euro at 1.33 and 1.13 respectively when the London market closed.

Multi-nationals on London’s premier index tend to enjoy a boost when the pound suffers because they benefit from a more favourable currency translation on their overseas earnings.

The pound was also reacting to the latest slew of data from the Office for National Statistics (ONS), which revealed a mixed picture for the UK economy at the start of the fourth quarter.

Figures from the ONS showed construction output unexpectedly fell by 1.7% on the month, as the industry was dragged down by a 1.5% decline in new work.

In contrast, Britain’s buoyant manufacturing industry delivered another robust performance in October, expanding by 0.1% as the wider industrial production came in flat.