Britain and the European Union are intensifying negotiations to try to bridge the gaps in securing a free trade agreement before the end of the year. But, one analyst has warned despite the discussions being ramped up, sterling has remained neutral. Derek Halpenny, head of research at MUFG, said: “We are becoming increasingly confident that the lift the pound would derive from a Brexit deal being confirmed is likely to be modest.
“Yesterday was a good example of some good news failing to provide much lift at all for sterling.”
It came after the EU’s chief negotiator, Michel Barnier, on Monday said he would be in London until Wednesday to negotiate a deal, after which talks will switch to Brussels.
Sterling rose only slightly against the euro, however, and fell versus the US dollar.
On Tuesday, the British pound was flat against both currencies at 90.70 pence and $1.3021 respectively.
As well as the uncertainties of Brexit, the UK is also grappling with the economy-crippling coronavirus crisis.
Meanwhile, Rolls-Royce Holdings Plc plans to temporarily close factories, reduce working hours and cut benefits as part of new cost-cutting measures, the Financial Times reported on Monday.
Gold prices rose after a fresh wave of coronavirus infections raised concerns over a global economic recovery and bolstered the precious metal’s safe-haven appeal.
In other news oil prices eked out small gains after recent sharp losses, but sentiment remained subdued as a surge in global coronavirus cases hit prospects for crude demand while supply is rising.
The UK blue-chip index closed 1.2 percent lower on Monday weighed by travel and energy stocks, while a resurgence in novel coronavirus cases stoked fears of a faltering economic recovery and dragged down European markets.
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David Madden, market analyst at CMC Markets UK, said: “European stock markets sold off again as worries about the health crisis have become more entrenched.
“Monday was a brutal session for equities as the jump in Covid-19 cases in Europe and the US, plus tougher restrictions, hammered traders’ confidence in the markets.
“On Tuesday, things started out on a relatively quiet note, especially for the FTSE 100, but the coronavirus fears resurfaced.”
5.00pm update: FTSE-100 closes down
The FTSE-100 index at the close was down 63.02 at 5728.99.
The FTSE Mid-250 index closed down 265.59 at 17587.71.
4.45pm update: New COVID curbs in Europe
European governments moved on Tuesday to impose new curbs to halt the spread of coronavirus.
World leaders face an increasingly difficult task holding the disease at bay while keeping their economies afloat.
“We are dealing with exponential growth,” German Economy Minister Peter Altmaier told a virtual German-French economic conference in Berlin. “In Germany the number of new infections is rising by 70-75 percent compared to the week before.”
3.45pm update: FTSE-100 down
The FTSE-100 index at 3:45pm was down 61.20 at 5730.81.
3.00pm update: Dollar dips after previous gains
The US dollar slipped on Tuesday.
“The uncertainty in the economic outlook has not changed one bit,” said Edward Moya, senior market analyst, at OANDA in New York, but noted that some positive stories on the US earnings front.
“Markets are becoming more convinced a blue wave is happening,” Moya said, referring to a victory of the Democratic Party in the Senate, House of Representatives, and the White House in next Tuesday’s election.
“The prospects of a Biden administration is probably more positive for the fight against COVID,” he added.
1.45pm update: FTSE-100 down
The FTSE-100 index at 1:45pm was down 25.75 at 5766.26.
1.25pm update: Supermarkets demand non-essential item rule relaxed in Wales
Wales’ lockdown ban on selling non-essential items should be relaxed to allow customers “to make their own decisions”, retailers have told the Welsh Government.
A joint statement by CBI Wales, the Welsh Retail Consortium, and the Association of Convenience Stores, said it hoped the Welsh Government would now agree to its proposals.
The statement said: “We recommend the individual customer is trusted to make their own decision as to whether a product is non-essential or not, taking into account the notices displayed throughout the store and their immediate needs.
“If the customer goes ahead with the purchase of the item the final liability ought to rest with the customer.”
The Welsh Government is expected to revise its guidance to retailers later on Tuesday.
12.45pm update: FTSE-100 down
The FTSE-100 index at 12:45pm was down 7.52 at 5784.49.
11:44am update: FTSE 100 rallies
The FTSE-100 index was up 6.05 at 5798.06.
10.30am update: UK hotel market hit by chaos
Premier Inn owner Whitbread said the UK hotel market has been hit by local restrictions and instructions for workers to stay at home as it swung to a half-year loss.
The company, which also runs Beefeater and Brewer’s Fayre sites, said summer trade across its reopened venues had been “encouraging”.
However, it said the latest wave of coronavirus infections is threatening even more damage to a sector which has seen widespread layoffs.
Whitbread chief executive Alison Brittain said: “The impact of the Covid pandemic on the hotel sector will undoubtedly be significant and we are already seeing signs of distress and constraint in the competitive landscape.
“This is likely to accelerate the structural changes in the market with supply contraction and constrained investment amongst independent and budget-branded operators in both the UK and Germany.”
9.10am update: FTSE drops on open
FTSE has suffered an early blow this morning, as concerns over Brexit and coronavirus continue.
The UK index has fallen 33 points in just over an hour, after opening at 5,792. It now sits at 5,759.
8.30am update: Revolution Bars to close venues
Revolution Bars plans to close six of its sites, putting 130 jobs at risk, as it turns to creditors for help after the Government’s 10pm curfew cut its sales by more than a third.
The company said its subsidiary, Revolution Bars Limited, is to set up a company voluntary arrangement (CVA) as it tries to slash costs.
Creditors will vote on November 13 to accept the deal, which includes plans to close six bars, and reduce rents at seven others.
8am update: Currency latest
The pound at 8am was 1.3021 dollars compared to 1.3022 dollars at the previous close.
The euro at 8am was 0.9077 pounds compared to 0.9080 pounds at the previous close.