London stocks were treading water Wednesday as traders wound down ahead of the holidays, but the pound surged after data showing improved U.K. economic growth numbers.
The FTSE 100 index
UKX,
rose 0.1% to 7,306, in a week that has seen the index rise 0.5%. The pound
GBPUSD,
meanwhile, climbed 0.4% to $1.3329. That was following a final estimate for third-quarter U.K. economic growth that showed 1.1% growth in that period below an initial 1.3% rate.
Second-quarter growth was revised down 0.1% points, but there were also upward revisions across the full year, noted Investec economist Sandra Horsfield. “As a result, the level of GDP in Q3 is currently said to have been just 1.5% below its pre-pandemic level of Q4 2019 rather than the 2.1% estimated previously,” she said in a note to clients.
That said, other data showed the current account deficit widening to 24.4 billion pounds ($32.5 billion) in the third quarter, versus a wider than expected revised deficit of 13.5 billion in the second quarter.
Kit Juckes, head of FX strategy at Societe Generale, said probably the “real driver of sterling strength is short-covering after another failure to re-test GBP/USD 1.32. A move lower seems unlikely until we get more news, on omicron perhaps, in the days ahead,” he said.
The U.K. government decided to reduce the number of self-isolation days to 7 from 10 for those who get a negative test on a lateral flow test for two straight days. The U.K. continues to post surging cases of the new variant.
Heavily weighted banks and energy stocks provided support for the index, while consumer goods stocks tugged the other way. BP
BP,
BP,
shares rose 1% and Unilever shares
UL,
ULVR,
fell 0.4%.
The London Stock Exchange will close around midday on Christmas Eve, then not reopen again until January 29.
