Business Insight

Referendum call fails to dent pound's rise

Scottish and Southern Energy Headquarters in Perth, as SSE customers are to be slapped with a 6.9 per cent increase in the price of their dual fuel bills, a move that will see £73 added to their household costs. The energy giant said the hike is the result of an average 14.9 per cent electricity price increase and will impact 2.8 million customers PICTURE: Andrew Milligan/PA
Kalyeena Makortoff,

THE pound rose yesterday despite an announcement from Scotland's first minister outlining plans to hold a second independence referendum in light of Brexit.

Sterling rose more than 0.5 per cent against the US dollar to 1.222, and climbed over 0.6 per cent versus the euro to 1.147.

The currency rose even after Nicola Sturgeon said she would seek the approval of MSPs at Holyrood next week to start negotiations with the UK government on a deal that would allow a legally binding ballot to be held.

The move could mean a second independence vote could take place as early as autumn 2018 – but the news did not surprise markets.

Jasper Lawler, a senior market analyst at London Capital Group, said: "The British pound was higher on the day since the announcement was well telegraphed by First Minister Nicola Sturgeon.

"The pound has already fallen sharply since the first rumblings of another referendum began two weeks ago."

He said future currency movements will depend on whether Prime Minister Theresa May decides to allow Ms Sturgeon to hold the vote.

However, "the critical language so far from the government would suggest it won't grant the referendum," Mr Lawler said.

The FTSE 100 also stood strong, rising 0.3 per cent or 24 points to 7,367.08 – pulled higher by mining stocks on the back of a slight rise in metals prices.

Fresnillo climbed 76p to 1,436p, while Antofagasta rose 36.5p to 784.5p, Anglo American rose 46p to 1,186.5p, and Rio Tinto rose 126p to 3,304.5p.

Across Europe, the French Cac 40 and German Dax rose 0.1 per cent and 0.2 per cent, respectively.

In oil markets, Brent crude was flat at US$51.31 per barrel (£41.96), languishing near three month lows as investors continued to worry about whether drilling activity in the US was effectively offsetting Opec supply cuts meant to address the global glut.

In UK stocks, Bovis shares soared 82.5p to 910.5p after the troubled housebuilder confirmed it had rebuffed a share and cash deal from Redrow and snubbed an all-share transaction from Galliford Try.

However, talks with Galliford Try are ongoing. If successful, the deal would create one of Britain's biggest housebuilders capable of producing 7,000 homes a year, with a combined market capitalisation of £2.4 billion.

Shares in SSE rose 7p to 1,510p after saying it planned to hike the price of annual dual fuel bills by 6.9 per cent. The energy provider blamed the move in part on rising electricity supply costs.

Wood Group shares rose 10.5p to 762.5p after the oil services company reached an agreement to take over rival Amec Foster Wheeler in a £2.2 bn deal.

Amec Foster Wheeler shares surged 56.8p to 546p on the back of the news.

The best performers on the FTSE 100 were Fresnillo up 76p to 1,436p, Antofagasta up 36.5p to 784.5p, Capita up 23.5p to 568p, and Anglo American up 46p to 1,186.5p.

The biggest fallers on the FTSE 100 were BT Group down 10.85p to 331.6p, Standard Life down 8.5p to 371.5p, BP down 7.2p to 463.5p, and Royal Bank of Scotland Group down 3.7p to 241.3p.

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