Sterling has rallied 1.2% to $1.3390 versus the US dollar as markets showed some relief that EU trade talks haven’t collapsed,’ says Russ Mould, investment director at AJ Bell.
“The fact that negotiations have been extended to the end of the year gave investors hope that a deal could still be reached. The FTSE 250 jumped 1.2% to 19,852 while the FTSE 100 advanced by 0.3% to 6,564 with housebuilders, banks and retailers all rallying across both indices.
“This is encouraging, but one must also remember that only a few days ago the market was starting to lose hope of a deal. Stocks jumped on Monday because there is more time for negotiations, not because feedback from either side has been particularly positive. Therefore, today’s stock rally could easily prove to be a false dawn.
“Elsewhere, Royal Mail fell 1.1% amid growing backlash over severe delivery delays. It seems to be struggling under the weight of demand for online shopping and people sending gifts to friends and family who this year they may not get to see in person.”