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Pound holds above lows as Brexit talks begin

The extent to which the Brexit talks have any day-to-day influence on the market will become clear in the days and weeks ahead, as negotiators from the UK and the EU seek to draw up departure terms while investors look on.

What you need to know

  • Pound holds above seven-month euro lows as formal Brexit talks begin
  • Dollar drifts against major rivals
  • Xetra Dax 30 near record high
  • European and Asian equities rise
  • Oil prices back under pressure, with Brent holding $47

As trading on day one of the negotiations begins, the pound is 0.1 per cent weaker against the euro at £0.8767, within levels established over the last three sessions. It remains off the seven-month low it touched against the shared currency a week ago, on worries about political instability in Westminster in the run-up to the talks. Against the dollar, sterling is down 0.1 per cent at $1.2781.

On equities markets, the FTSE 250, the mid-cap equity index seen as more representative of the domestic UK economy, is up 0.3 per cent, led by Ocado, the food delivery business seen as a potential target amid bid activity in the food retail sector. The FTSE 100, home to a range of multinationals that benefit from sterling weakness, is up 0.7 per cent.

The region-wide Euro Stoxx 600 is also up 0.7 per cent, with the Xetra Dax 30 in Frankfurt up 0.9 per cent at 12,857.79 taking it back toward its record high of 12,921.14 hit on June 14.

France’s CAC 40 is making the best gain among its peers, up 1 per cent, after Emmanuel Macron’s convincing win in the French assembly elections.

In Japan the broad Topix benchmark was up 0.7 per cent while in Hong Kong the Hang Seng index rose 0.9 per cent.

China’s Shanghai Composite is up 0.6 per cent while the tech-focused Shenzhen Composite added 0.4 per cent. Investors were turning their attention to a decision due on Tuesday by MSCI on whether to include China A-shares in its globally tracked emerging markets index.

The euro is up 0.1 per cent against the dollar at $1.1204.

The Japanese yen was 0.1 per cent weaker at ¥‎111.01 per dollar after data showing imports and exports grew by less than expected in May.

The dollar index, measuring the US currency against a basket of global peers, was flat at 97.168, having pulled back in the wake of the Federal Reserve’s decision last week to raise interest rates.

Oil prices are weakening further, with Brent crude, the international benchmark, down 0.3 per cent at $47.21 a barrel and West Texas Intermediate off 0.2 per cent at $44.56.