Sterling slide helps FTSE 100 snap losing streak

A disappointing set of manufacturing figures helped drag the British currency down.

The pound took another Brexit beating (Dominic Lipinski/PA)
The pound took another Brexit beating (Dominic Lipinski/PA)

Sterling started the week on the back foot on Monday, dragged down by weak manufacturing figures and yet more Brexit uncertainty.

The pound shed 0.6% versus the dollar to end the session at 1.288, while it fell 0.7% against the euro at 1.108.

A disappointing set of manufacturing figures helped drag the British currency into the doldrums, with output in the sector falling to its lowest level in more than two years in August following a collapse in overseas demand.

The Markit/CIPS UK Manufacturing purchasing managers’ index (PMI) showed a reading of 52.8 last month, down from 53.8 in July and well below economist expectations of 54.

The figure represents a 25-month low and means the sector is likely to fail to provide support to the wider UK economy in the third quarter.

Brexit also reared its head, with EU negotiator Michel Barnier rebuffing Theresa May’s Chequers plans and the Prime Minister facing more ire from former foreign secretary Boris Johnson.

David Madden, market analyst at CMC Markets, said: “There is still uncertainty surrounding Brexit.

“Michel Barnier, the EU negotiator, said he is strongly opposed to Prime Minister May’s trading proposals.

“Meanwhile, Mrs May will not compromise on the plans she mapped out at Chequers. Once again, the water has been muddied regarding the discussions, and while there is no easy end in sight, pressure is likely to remain on the pound.”

The FTSE 100, meanwhile, feasted on the pound’s weakness, closing up 72.18 points, or 0.97%, at 7,504.6p and snapping a three-day losing streak.

A weaker pound boosts earnings for multinationals, which report in dollars.

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Royal Mail shares surged towards the top of London’s premier index after the postal firm splased out £213 million to acquire Canadian parcel delivery company Dicom.

The deal, struck through Royal Mail subsidiary General Logistics Systems, is part of the company’s geographic diversification strategy. Shares closed up 13.5p at 461.5p.

WPP shares flatlined after the ad giant confirmed that Mark Read is to become chief executive, months after the departure of long-standing boss Sir Martin Sorrell in controversial circumstances.

Mr Read, who previously headed up WPP’s Wunderman business, had been acting as joint operating chief. The stock ended up 2p at 1,276.5p.

On the FTSE 250, shares in Dechra Pharmaceuticals plunged after the veterinary drugs manufacturer warned its contingency planning for a hard Brexit will result in higher costs.

The company said it will set up a testing facility in the EU and transfer product registrations to a subsidiary within the bloc, with costs set to total over £2 million. Shares collapsed 668p to 2,452p.

In Europe, Germany’s DAX was down 0.2% and France’s CAC was up 0.03%.

Brent crude was trading at 78 US dollars a barrel, an increase of 0.5%.

The biggest risers on the FTSE 100 were Smurfit Kappa up 100p at 3,230p, Royal Mail up 13.5p at 461.5p, Standard Life Aberdeen up 7.6p at 324.5p and BT Group up 4.9p at 222.25p.

The biggest fallers on the FTSE 100 were United Utilities down 14.6p at 727p, Tui down 21.5p at 1,400.5p, Severn Trent down 30p at 1,971p and British Land down 6.p at 629p.

Press Association

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