Pound highest against dollar since the EU vote

STERLING has surged to its highest level against the US dollar since the EU referendum result, following reports that finance ministers from Spain and the Netherlands will push for a “soft Brexit” deal.

The pound was up more than one per cent versus the greenback at 1.368 after Bloomberg revealed that finance ministers from both nations aimed to support a divorce agreement that keeps Britain as close to the European Union as possible. The pound was trading at close to $1.50 ahead of the EU referendum in 2016.

The UK currency was also capitalising on the US dollar’s weakness in response to Ameri- can consumer inflation slowing to 0.1 per cent in December.

Versus the euro, sterling was 0.3 per cent higher at 1.128 euros. The move came as the FTSE 100 Index continued its remarkable run by securing another all-time closing high, rising 15.70 points to 7,778.64.

Neil Wilson, ETX Capital senior market analyst, said: “Throughout the day dollar weakness lifted sterling as the cable continued its year-long uptrend. With 1.36 breached, the next target for bulls was the September high of $1.3657, which was duly taken out following reports that Spain and the Netherlands will work toward a soft Brexit deal, with GBP USD making a stab at $1.37 before pulling back to trade around the 1.3670 US dollar level.

“Although the comments came from just two ministers who don’t necessarily speak for the Barnier team as such, there is a sense that the direction of travel for the UK with regards Brexit is a lot more positive than it was prior to December.”

European markets were also enjoying a bright day’s trading, with Germany’s Dax up 0.3 per cent and the Cac 40 in France rising by 0.5 per cent.

The price of oil was just shy of the $70mark when the London market closed, but remained ahead in response to official data earlier this week pointing to a fall in US production and crude inventories. Brent crude rose by 0.4 per cent to $69.35 a barrel.

Focusing on UK stocks, engineering firm GKN was the biggest riser on the top flight after rejecting a £7 billion takeover bid from Melrose.

The company said on Friday that it rebuffed an “opportunistic” and “unsolicited” proposal from the turnaround specialist as it undervalued GKN.

The offer represented a price of 405p per share, comprising 80 per cent in new Melrose shares and 20 per cent in cash. Shares closed down 87.3p to 420p. Away from the top tier, Caril

lion dropped nearly 29 per cent after it emerged lenders to the construction giant effectively rejected a rescue plan proposed by the debt-laden group. Shares dropped 5.79p to 14.2p.

The biggest risers on the FTSE 100 Index were: GKN up 87.3p to 420p, Smiths Group up 84.5p to 1,652p, M&S up 8p to 309.2p,

WPP up 30.5p to 1,354.5p. The biggest fallers were NMC Health down 62p to 3,102p, Shire down

66.5p to 3,581p, British American Tobacco down 82p to

4,968p and Direct Line down 5.3p to 371p. WALL Street continued its rally yesterday with record closing highs as the fourth-quarter earnings season kicked off with solid results from banks and robust retail sales drove investor optimism about economic growth.

The S&P 500 and Nasdaq both registered their eight record-closing highs out of the first nine trading days of 2018, while the Dow boasted its sixth closing high of the year.

JP Morgan, the biggest US lender by assets, said a US tax overhaul would help future profits by reducing its tax bill and stimulating more business. The bank’s shares rose 1.7 per cent.

“The fact all the big money centre banks beat on the bottom line is a good omen for the rest of the earnings season,” said William Lynch, director of investments at Hinsdale Associates, in Hinsdale, Illinois.

Investors were also hopeful 2018 financial forecasts from US companies would beat Wall Street estimates as many analysts may not have tax savings fully reflected in their models as the tax bill was signed into law so late in December.

BlackRock rose 3.3 per cent. The world’s largest asset manager reported profit that beat estimates as investors flooded into the relatively low-cost funds.

The Dow Jones Industrial Average rose 228.46 points to 25,803.19, the S&P 500 gained 18.68 points to 2,786.24 and the Nasdaq Composite added 49.29 points to 7,261.06.