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Pound falls on 'disturbing deadlock' over Brexit

Pound falls on 'disturbing deadlock' over Brexit
 

Update: The pound has fallen after the European Union's chief negotiator warned of a 'deadlock' in talks over Britain's divorce bill as part of its exit from the EU.

Michel Barnier said at a joint press conference with Brexit secretary David Davis that sufficient progress on Britan's payment had not been made to allow trade talks to begin.

'On this question we have received a state of deadlock, which is very disturbing for thousands of project promoters and very disturbing for taxpayers... I'm not able to propose to next week's European council that we start discussions on the future relationship,' he said.

The pound fell 0.4% against the dollar to $1.317 on the news. 'It's been another trying day for the pound and it's incredible to think how volatile the currency movements are based purely around comments on the ongoing Brexit negotiations,' said Dennis de Jong, managing director at  foreign exchange broker UFX.

The pound's fall helped to lift the FTSE 100 into gains, with the UK blue-chip index trading 22 points, or 0.3%, higher at 7,556. 

A weaker pound tends to boost the index, whose members rely on overseas markets for around three-quarters of their earnings.

(10:33) Estate agent shares hit

Shares in estate agents have fallen as fresh data showed the UK housing market stalling, with prices and sales falling in London.

The Royal Institute of Chartered Surveyors (RICS) said demand from buyers and sales had fallen across the UK, with London and the South East the hardest hit.

While prices held steady across the UK in September, in London they fell, and in the South East they registered a smaller decline.

RICS chief economist Simon Rubinsohn said the figures illustrated 'just how important the regional narrative is at the present time'.

'In part this is a reflection of affordability constraints hitting the higher priced segments of the market,' he said.

'It is perhaps also indicative of a shift in economic momentum in the face of the increasing possibility of the first hike in base rates in over 10 years.'

The news hit shares in estate agents. Foxtons (FOXT), which focuses on the London market, dropped 2.6% to 64.9p, while Countrywide (CWD) fell 1.5% to 114.3p.

Berenberg initiated coverage of Foxtons with a 'sell' rating and 50p price target, arguing it would suffer from the rise of online-only estate agent Purplebricks (PURP).

'Foxtons is a premium supplier of estate agency services in London. We see its service as offering a good customer experience but its cost base remains high and fixed during a slowing of the London sales market, fee pressure from the success of Purplebricks in key areas and declining rents,' the analysts said.

They also slapped a 'sell' rating on Countrywide, with a 95p price target. 'Countrywide has been caught with high debt, having invested in acquisitions just as the house transaction cycle turns, and competition intensifies as the industry faces intense disruption by hybrid agencies,' they said.

'Meanwhile we think its digital offering has fallen flat - mainly because it is competing with itself and other traditional estate agents rather than Purplebricks, in our view.'

The analysts reserved their only 'buy' rating in the sector for Purplebricks, whose shares rose 5.8% to 368.3p on the news.

'Since starting in April 2014, Purplebricks has rapidly grown to become a dominant name in the UK estate agent industry,' they said.

'It has doubled its net number of listings since the star of the year to 16,000 and has a near-monopoly on growth as the underlying market remains subdued, in our view. We expect its growth to be maintained.'

The FTSE 100 edged four points higher to 7,538 points while on the FTSE 250, shares in Just East (JE) jumped after competition authorities gave the go-ahead to its acquisition of rival Hungryhorse.

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