The last 12 hours have seen some notable moves in sterling, with the pound first pushing higher on reports late last night that the UK is prepared to remain in the customs union post-Brexit, before paring those gains this morning after Downing Street essentially dismissed the news. The FTSE is little changed on the day, remaining within striking distance of its record peak although Royal Mail is a significant laggard, falling by almost 5% in the session.
Sterling gains in volatile trade
Given the rumour and counter rumour surrounding customs union there has been pretty volatile trade in the pound, but as the dust settles price is looking to push higher. A swift gain last night as the news first broke has been pared back but, the market remains higher than it did beforehand with the GBPEUR rate close to a 3-week high. It is apparent that the government still falls short of achieving a united front as far as its standpoint on replacing the current customs union is concerned, but the latest developments suggest there is growing support for a post-Brexit agreement that more closely resembles the existing arrangement and this is good news for the pound.
Royal Mail shares slump despite rise in revenues
The worst performing blue-chip today is Royal Mail, with shares falling almost 5% after the release of its latest trading update. The highlight from the results was undoubtedly revenues, which blasted up through the £10B barrier, but this has failed to mask a number of slight disappointments which on balance give the feeling of mild disappointment. Whilst revenues increased overall, UK sales were flat and with letter volumes expected to fall next year the outlook ahead remains challenging, with competition from the likes of Amazon looking set to only increase going forward. Royal Mail also received some unwanted publicity yesterday with the announcement that its incoming CEO, Rico Back, is to be paid almost £6m to buy out his contract from the group’s European parcels division.
Ocado shares surge on US partnership deal
Reports that Ocado has struck a partnership deal with US supermarket chain Kroger has sent its stock price rocketing higher, with the market jumping over 40% on the day. The deal will see Kroger take a 5% stake in the company and gives the US business the exclusive rights to use Ocado’s technology for grocery and other food distribution in return for undisclosed monthly fees. Ocado has secured a number of similar deals in recent months, with arrangements agreed upon with Swedish supermarket ICA, Canadian grocer Sobeys and French supermarket operator Groupe Casino.
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