Markets

Sterling overtakes greenback as Trump's trade aide hits out at Germany

The pound rose against the dollar by 0.7 per cent yesterday but fell slightly against the euro by 0.1 per cent to 1.166

STERLING made gains against the dollar yesterday after Donald Trump's trade adviser struck out at Germany, saying the country was undervaluing the euro to exploit the EU and US.

The pound rose around 0.7 per cent against the greenback to 1.256 in afternoon trading, as investors fled from the US dollar amid economic and political uncertainty.

Michael Hewson, chief market analyst at CMC Markets UK, said: "The events of the last 24 hours and the departure of the US attorney general have served to build up that apprehension and the risks that the investment road could well start to get even rockier with even more potholes, given the intervention this afternoon of US president Donald Trump's trade adviser Peter Navarro about German debasement of the euro."

Mr Navarro, who heads up the president's National Trade Council, said the single currency was "grossly undervalued" and dubbed it an "implicit Deutsche Mark" that gives Germany a competitive advantage.

Germany has a trade surplus with the US and the bulk of the Eurozone, and a weak euro means German exports are cheaper to overseas buyers.

The comments caused investors to shy away from riskier assets such as stocks, helping push the FTSE 100 down 19.33 points to 7099.15.

Across Europe, the French Cac 40 and German Dax fell 0.75 per cent and 1.25 per cent respectively.

However, strong Eurozone data – including inflation, which rose to its highest level since early 2013 – sent the euro higher.

Sterling fell 0.1 per cent against the euro to 1.166.

In oil markets, Brent crude rose 1.5 per cent to US$56.13 per barrel (£44.64), as the drop in the greenback made the dollar-denominated commodity cheaper for overseas investors.

In UK stocks, Royal Dutch Shell's 'B' shares fell 9.5p to 2,236.5p following news that it would sell off a package of North Sea assets for up to US$3.8 billion (£3bn) to smaller rival Chrysaor as part of its divestment drive.

Ocado shares rose 5p to 249.4p as the online grocer reported a 21.8 per cent rise in pre-tax profits to £14.5 million in the year to November 27, marking its third consecutive year in the black, as it continued to grow its customer base.

SSE fell 3p to 1,489p after reporting that 50,000 customers fled in favour of rival energy suppliers in the three months to December 31, amid "volatile" market conditions.

Joules Group shares fell 4p to 216.5p despite the upmarket clothing firm posting a 16.2 per cent increase in sales to £81.4m in the 26 weeks to November 27, as customers flocked to its bobble hats and padded gilets.

The biggest risers on the FTSE 100 were Fresnillo up 39p to 1,453p, Antofagasta up 21p to 835p, London Stock Exchange Group up 63p to 3,171p, and Hargreaves Lansdown up 25p to 1,353p.

The biggest fallers on the FTSE 100 were Legal & General Group down 4.9p to 234.9p, Carnival down 86p to 4,238p, Associated British Foods down 45p to 2,386p, and International Consolidated Airlines Group down 8.7p to 476.7p.

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