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Dec. 16, 2019, 10:13 a.m. EST

British pound and stocks continue to rise after U.K. election

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By Steve Goldstein, MarketWatch


Associated Press
U.K. Prime Minister Boris Johnson

The British pound climbed and U.K. equities boomed on Monday in the wake of last week’s election, which kept the Conservative Party in power with a majority.

The British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.5822% rose to $1.3355 from $1.3329. The currency did rise above $1.35 shortly after Prime Minister Boris Johnson’s party convincingly won the general election, but then lost some of its gains.

The pound is still up 7.5% against the greenback over the past three months.

Traders on Monday preferred large caps to mid caps, but both advanced. The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.44%  jumped 2.5% to 7537.80, while the mid-cap FTSE 250 /zigman2/quotes/210598417/delayed UK:MCX -0.40%  gained 1.8% to 21894.90.

Analysts at Bank of America expect the FTSE 100 to reach 7,700 by March. “Domestically exposed U.K. stocks have already outperformed foreign-exposed U.K. stocks by 14% since mid-August — and our macro assumptions imply near-term downside of up to 7%. As a consequence, we remain underweight domestic vs foreign-exposed U.K. stocks, a position we have held since late October,” they told clients.

Between July 23 and Dec. 13, U.K. airlines surged 31%, while U.K. automobile plays fell 46%, according to ratings agency Standard & Poor’s data. More generally, so-called domestic revenue plays rose 17% over that timeframe, while foreign revenue plays fell 5%, according to S&P.

British American Tobacco /zigman2/quotes/209116881/delayed UK:BATS +0.27%  was the best FTSE 100 performer on Monday, rising over 4%, as Bank of America upgraded the company to buy from underperform.

Sports Direct  shares surged 29% as the retailer which is changing its name to Frasers Group said its first half underlying pretax profit surged 58% on 14% revenue growth. Excluding acquisitions and currency movements, revenue fell 6.4%. The stock has nearly doubled this year.

/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.2957
+0.0075 +0.5822%
Volume: 0.0000
Feb. 21, 2020 4:59p
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,403.92
-32.72 -0.44%
Volume: 838,159
Feb. 21, 2020 4:59p
loading...
/zigman2/quotes/210598417/delayed
UK : FTSE UK
21,780.20
-86.49 -0.40%
Volume: 241,326
Feb. 21, 2020 4:59p
loading...
/zigman2/quotes/209116881/delayed
UK : U.K.: London
3,352.50 p
+9.00 +0.27%
Volume: 2.89M
Feb. 21, 2020 4:35p
P/E Ratio
12.48
Dividend Yield
6.06%
Market Cap
£76.44 billion
Rev. per Employee
N/A
loading...

Steve Goldstein is MarketWatch markets editor for Europe. Follow him on Twitter: @MKTWgoldstein.

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