U.K. Prime Minister Boris Johnson
The British pound climbed and U.K. equities boomed on Monday in the wake of last week’s election, which kept the Conservative Party in power with a majority.
The British pound GBPUSD, +0.3301% rose to $1.3366 from $1.3329. The currency did rise above $1.35 shortly after Prime Minister Boris Johnson’s party convincingly won the general election, but then lost some of its gains.
The pound is still up 7.5% against the greenback over the past three months.
Analysts at Bank of America expect the FTSE 100 to reach 7,700 by March. “Domestically exposed U.K. stocks have already outperformed foreign-exposed U.K. stocks by 14% since mid-August — and our macro assumptions imply near-term downside of up to 7%. As a consequence, we remain underweight domestic vs foreign-exposed U.K. stocks, a position we have held since late October,” they told clients.
Between July 23 and Dec. 13, U.K. airlines surged 31%, while U.K. automobile plays fell 46%, according to ratings agency Standard & Poor’s data. More generally, so-called domestic revenue plays rose 17% over that timeframe, while foreign revenue plays fell 5%, according to S&P.
British American Tobacco BATS, +4.33% was the best FTSE 100 performer on Monday, rising over 4%, as Bank of America upgraded the company to buy from underperform.