LONDON MARKETS : FTSE 100 Rises As Pound 'falls Out Bed' On

10/06/2017 | 10:11am

By Sara Sjolin, MarketWatch

Sterling set for worst week since flash crash a year ago

U.K. stocks headed higher on Friday, boosted by a weaker pound, which slid further on growing speculation that the government will call a snap election.

The FTSE 100 index rose 0.1% to 7,517.55, rising for a seventh session in the past eight. For the week, the London benchmark was on track for a 1.9% gain, which would be its biggest weekly advance since early August.

Meanwhile, the pound slumped to $1.3078, down from $1.3118 late Thursday in New York. Sterling is now set for a 2.5% weekly tumble, its biggest since the week ending Oct. 7, 2016, when the currency lost 4.1% against the dollar after a flash crash.

Against the euro, the pound fell to EUR1.1183, down from EUR1.1202 on Thursday.

"The British pound has fallen out of bed since the end of the Conservative party conference. Luckily for U.K. investors, the pound's negative correlation with returns on blue-chip stocks is going strong," said Jasper Lawler, head of research at London Capital Group, in a note.

He noted that the sterling slump isn't just a reflection of dollar strength, as the fall against the euro indicates the issues are more local.

"MPs' confidence in Theresa May is at a low point. But having made it through the poor election result, it would seem daft for her to quit, in effect because she had a cold. If May can hang on, the pound is due a correction of recent losses, at least against the euro," he added.

The pound's tumble comes after U.K. Prime Minister Theresa May's "disastrous" speech at the Tory party conference on Wednesday and continued gridlock with Brussels over Brexit. The combination has led to growing speculation the U.K. leader will resign and call an early, or "snap," election. The Brits headed to the polls as recently as June, when May's gamble in calling a snap vote failed and her party lost its parliamentary majority.

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The dollar on Friday traded higher as traders waited for the closely watched U.S. nonfarm payrolls report. The monthly jobs data is due out at 8:30 a.m. Eastern Time, or 1:30 p.m. London time.

Stock movers: Shares of EasyJet PLC (>> EasyJet) fell 1.3% after the discount airline said it expects profit for fiscal 2017 to be at the upper end of its guidance range, but also highlighted pressures facing the sector.

CRH PLC fell 1.4% after U.S. cement maker Ash Grove Cement Co. (ASHG) on Thursday said it received a takeover proposal valued at up to $3.8 billion, topping the $3.5 billion offer made by CRH in September.

 

Stocks mentioned in the article : EasyJet

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