U.K. stocks pared their gains into the close on Friday as the pound swung higher after U.S. President Donald Trump backtracked on his criticism of Theresa May’s Brexit plans and said a U.S.-U.K. trade deal is still possible.
The pound had traded sharply lower earlier in the day after a bombshell interview with Trump in the Sun newspaper in which the U.S. president said May’s Brexit strategy may “kill” Britain’s chances of a trade deal with the world’s largest economy.
How markets are movingThe FTSE 100 index UKX, +0.14% rose 0.1% to close at 7,661.87, after trading as high as 7,716.24 earlier in the day. For the week, the London benchmark ended 0.6% higher, breaking a two-week losing run.
The pound GBPUSD, +0.0833% traded at $1.3215, up from $1.3206 late Tuesday in New York. Sterling fell to as low as $1.3102 following the Sun interview.
What’s driving the market?U.K. stocks had opened with firm gains, largely supported by a sharp fall in the pound after Trump, in an interview with The Sun newspaper published late Thursday, said U.K. Prime Minister Theresa May’s plan for a so-called soft Brexit would damage the likelihood of a trade deal between Britain and the U.S.
Sterling weakness can bolster revenue made overseas by multinational companies, which are heavily weighted on the FTSE 100.
“If they do a deal like that, we would be dealing with the European Union instead of dealing with the U.K., so it will probably kill the deal,” said Trump, whose comments were published as May hosted a formal dinner for Trump on Thursday night.
The U.S. president, however, on Friday backtracked his criticism of May, saying at a joint press conference that he still supports a post-Brexit trade deal with the U.K.
May’s government on Thursday published a 120-page report that provided further details on the vision for the U.K.’s future relationship with the European Union, which was agreed at a Cabinet meeting last week. The strategy calls for frictionless trade in goods between the U.K. and the EU, prompting critics to say that wouldn’t amount to a clean break by the U.K. from the bloc.
Absolute scenes in Parliament Sq right now #Trumpbaby pic.twitter.com/bSikV46FFQ
— Elliot Wagland (@elliotwagland) July 13, 2018
