The pound has come under pressure ahead of chancellor Philip Hammond’s Budget, marking new seven-week lows against the dollar and on course for its eighth daily fall in the last nine trading days.
Sterling dropped 0.3% against the dollar to $1.1216 amid investors nerves ahead of the Budget, with Hammond’s likely caution contrasting with US president Donald Trump’s pro-growth agenda.
‘We expect sterling to tread water with a bearish bias as we lead up to the Budget, after all the contrasting fiscal stances between the UK and the US is decidedly pound negative,’ said Kathleen Brooks, research director at City Index.
‘However, if the chancellor manages to avoid terrifying the market with his continued push for austerity and instead focuses on a positive fiscal outlook for the UK – with borrowing down and tax take up – then the pound and gilt yields could stage a mini recovery on the back of Hammond’s speech.’
Paul Sirani, chief market analyst at Xtrade, said it was likely to be ‘a turbulent few hours for markets’.
‘Key to affecting the strength of the pound could be the expected announcement of a so-called “rainy day fund”,’ he said.
‘The more money, supposedly around £60 billion, that Philip Hammond can set aside for steadying the ship as it sails out of the single market, the more likely the pound is to hold its own.’
The renewed pressure on the pound follows yesterday’s falls, as the House of Lords debated the Article 50 bill.
The pound’s fall provided a small boost to the FTSE 100, which edged eight points higher to 7,347 points. Companies in the index derive around three quarters of their revenues from overseas.
ConvaTec (CTEC) was among the risers, up 1.7% at 262p and extending a strong run from Thursday’s solid results, after analysts at HSBC raised their price target. The shares have risen 13% since the medical devices firm last week reported an 8% rise in profits.
On the FTSE 250, Restaurant Group (RTN) jumped 8.9% to 356.4p as the Frankie & Benny’s owner pledged to cut costs by £10 million and said it would seek to turn around performance after an 11.2% fall in profits.
Inmarsat (ISA) was up 6.2% at 727p after the satellite company reported a 9.5% rise in earnings, while G4S (GFS) was another strong riser, up 6.3% at 284.3p after unveiling a 13.9% jump in profits.
Shares in Dignity (DTY) meanwhile tumbled, down 12.5% at £24.20 as the crematorium operator cut its earnings per share target from 10% to 8%, flagging increased competition.
Among ‘small cap’ stocks, Tyman (TYMN) jumped 9.6% to 306.8p as the door and window component supplier reported a 38% jump in profits.