Sterling has recovered ground since traders in London finished their breakfasts: it is now up for today at $1.4020 against the US dollar.
That represents a meagre 0.05% gain for Monday, but in the context of the last few years – during which the currency was held back by the threat of a no-deal Brexit – $1.40 is the highest for nearly three years.
Another key reason for the pound’s strong performance during 2021 so far has been its relative speed compared to other major economies in rolling out vaccines. Some economists believe that has laid the groundwork for a faster economic recovery.
There are signs that the pound may have been oversold even before the vaccine good news. David Owen, chief European economist at Jefferies, an investment bank, said that “part of the supposed underperformance of the UK economy last year was a measurement issue”. Jefferies forecasts GDP will fall by 5.6% in the first quarter of 2021, followed by a rapid recovery of 7.7% in the second quarter.
Prime Minister Boris Johnson’s approach to ending the UK’s lockdown could end up capping much further upside for the pound, said Ricardo Evangelista, an analyst at ActivTrades, a spreadbetting website.
The pound has, so far, been the top performing currency of the year, thanks to a successful vaccine rollout that generated enthusiasm amongst investors. If the UK’s roadmap to exit lockdown and reignite its economy proves to be too cautious in the eyes of market operators the pound’s recent galloping performance may start to fizzle out.
Rio Tinto boss received £1.4m pay rise despite sacred gorge destruction scandal
Rio Tinto’s ousted boss received a pay rise in 2020 despite overseeing the destruction of the Juukan Gorge, a sacred site in Australia.
Jean-Sébastien Jacques, the company’s former chief executive, received £7.2m during 2020, according to the mining company’s annual report on Monday. That was 24% higher than the £5.8m he was paid in 2019 as the value of shares awarded to him increased.
Jacques was forced to resign after the scandal caused outrage in Australia. Rio Tinto, which had known of the gorge’s significance to Aboriginal traditional owners, initially responded by cutting the bonuses of executives.
Despite the executive reshuffle prompted by the scandal, Rio enjoyed a bumper year as demand for iron ore soared. Last week it announced a record $9bn in dividends for 2020.
Simon Thompson, who has remained Rio Tinto’s chairman throughout the scandal, said:
Our strong performance during 2020 was overshadowed by the destruction of the ancient rock shelters in the Juukan Gorge and I reiterate our unreserved apology to the Puutu Kunti Kurrama and Pinikura (PKKP) people.
We fell far short of our values as a company and breached the trust placed in us. It is our responsibility to ensure that the destruction of a site of such exceptional cultural significance never happens again.
Germany’s business confidence has risen much more sharply than expected during February, according to a closely followed index run by the Ifo Institute.
The index hit 92.4* in February, signficantly above the 90.5 consensus from economists.
Klaus Wohlrabe, an Ifo economist, said the German economy was looking towards an upswing as confidence improved in construction, retail and other services sectors.
Expectations of German industry – a key part of the Eurozone economy – were especially pronounced, with production plans revised upwards significantly.
*This post has been corrected. The correct reading for the index was 92.4, not 94.2 as initially stated. Thanks to user Pyjamapeople for pointing out the error.
An added note on G4S: it is the biggest faller on the FTSE 350, down 10% after GardaWorld pulled out of the bid battle before it had really started.
However, that has still left shares at a higher point than they were before the pandemic.
An hour into the week’s trading, and UK stocks are not having a great time.
The FTSE 100’s blue chips are down by 1% at about 6,560 points, while the mid-cap FTSE 250 has also lost 1%, down to 20,836 points.
The biggest fallers on the main index are…