- The pound has risen against the US dollar due to its weakness, not sterling's strength
- Regardless of whether a Brexit deal is done before Christmas, the UK economy is weak
- This week's companies include London Stock Exchange, AJ Bell and Avon Rubber
The UK stock market’s muted response to the news that Britain had approved the use of Pfizer’s Covid-19 vaccine suggests that the rally we have seen in stocks over the last month has largely priced this news in.
Attention is now focused on the progress of trade talks with the EU to see if a deal can be done and ratified before the end of the year. There seems to be a growing consensus view that a deal will be done even if it is a fudged one.
This is despite the fact that, according to those close to the discussions, the two sides are still arguing about fish and state aid rules. Other rumours abound that Mr Barnier has given away too much to the UK which may lead Mr Macron to do his best General De Gaulle impression and say “Non” to any proposed deal.
Investors often turn to the currency markets to get a feel for the likely direction of travel. They are not always right and anyone taking a signal from currencies on 23rd June 2016 (the day of the UK's referendum on EU membership) would have been very badly misled.
An announcement of a trade deal may see a rally in sterling, to $1.40 or thereabouts as a crude guess, but I continue to maintain that the long-term fundamentals of the UK economy remain poor. I therefore stick by my preference for overseas shares and UK-listed shares with plenty of overseas profits.Download PDF