Pound strengthens but FTSE loses ground after US jobs data

Sterling was up about 0.3% against the US dollar at 1.28, and 0.2% against the euro at 1.1825 on Friday afternoon.

The pound held steady overnight as the General Election results were coming in (Dominic Lipinski/PA) (PA Wire)

The pound has strengthened against the US dollar and the euro after the UK ushered in a new government, while top European stock markets faltered as investors turned their attention to events overseas.

Sterling was up about 0.3% against the US dollar at 1.28, and 0.2% against the euro at 1.1825 on Friday afternoon.

Traders had been expecting the UK General Election to vote in a Labour Party majority, but Friday’s result affirmed hopes that a new government could bring about a period of greater political certainty and stability.

The pound had held steady overnight when the results were coming in, indicating that financial markets had long been pricing in the outcome.

But in equity markets, London’s FTSE 100 failed to hold on to gains from earlier in the day after new economic data in the US turned investors away from events happening at home.

The blue-chip index moved 37.33 points lower, or 0.45%, to 8,203.93 at close on Friday.

Key jobs market data showed that America’s unemployment rate ticked up 4.1% in June from 4% in May, showing further signs of a cooling labour market.

But Axel Rudolph, senior market analyst for IG, said the data may not have been enough to “counterbalance the US economy adding more jobs than expected in June”, with rising payroll figures suggesting there was still some heat in the market.

This may have led markets to pare back their expectations of an interest-rate cut in September, he said.

Nonetheless, the US’s S&P 500 was up about 0.3% and Dow Jones up about 0.1% by the time European markets closed.

In Paris, the Cac 40 closed 0.26% lower and in Frankfurt, the Dax rose 0.14%,

In company news, shares in Crest Nicholson jumped higher following reports it had attracted new bidding interest from rival builder Avant Homes.

Later on Friday, it confirmed that it had decided not to engage with the approach for an all-share proposal, because it could still receive a formal offer from Bellway, which was already interested in making a bid. Shares in Crest were up 2.2% at close.

Shell told shareholders it expects to take a hit of up to two billion US dollars (£1.6 billion) after it suspended construction work on one of Europe’s largest planned biofuels plants and sold a refinery in Singapore.

The oil and gas company nonetheless confirmed that its integrated gas production is expected to meet market expectations. Its share price closed 1.5% lower.

The biggest risers on the FTSE 100 were Smurfit Kappa, up 124p to 3,656p, United Utilities, up 34.2p to 1,025p, Vistry, up 43p to 1,302p, Severn Trent, up 75p to 2,504p, and Fresnillo, up 16.5p to 593p.

The biggest fallers on the FTSE 100 were HSBC, down 17.7p to 673.6p, Whitbread, down 75p to 2,936p, Intercontinental Hotels Group, down 184p to 8,062p, Standard Chartered, down 16.2p to 723p, and Smiths Group, down 38p to 1,700p.