Sterling slumps to new two-year low below $1.23 amid no-deal Brexit fears – as it happened
Rolling coverage of business, economics and markets as ministers ramp up plans to leave EU without a deal
- Just Eat agrees 9bn merger with Takeaway.com
- Neil Woodford sells more than half his shares in listed fund
- Ryanair boss warns Boeing 737 Max crisis could lead to job cuts
- Sports Direct shares dive after results chaos
4.00pm BST
The end of July may usually be a fairly sleepy time on financial markets, as investors head out on holiday, but this summer is already gearing up to be a nail-biter as the UK gears up for a no-deal Brexit.
Sterling is on track for its worst day since March, giving the new government under Boris Johnson a taste of what would happen if the UK leaves the EU without a deal.
If Boris Johnson's government presses for a no deal Brexit, the most likely outcome will be a no confidence vote in Parliament. This could, in turn, translate into an early general election (which would most likely be accompanied by an Article 50 extension).
The pound (not the Commons) may now be the Johnson Government's main opposition to a No Deal Brexit.
*Asked if a no-deal Brexit is now his assumption, Boris Johnson says "absolutely not"*
Time to talk up the pound? Cabinet has to realise the cost of their rhetoric $GBPUSD pic.twitter.com/sQpf96lxEQ
No, absolutely not. My assumption is that we can get a new deal, we're aiming for a new deal. But, of course, Michael is absolutely right that it's responsible for any government to prepare for a no deal if we absolutely have to.
3.15pm BST
Some extracts from the letter sent by the Woodford Equity Income Fund's authorised corporate director, Link Fund Solutions:
We anticipate that the suspension of dealing is likely to last until early December while we implement the strategy to re-position the portfolio in order for the Fund to be re-opened at that time, and which is conditional upon achieving the target fund profile. In our view, this is a realistic amount of time for Woodford to complete a measured and orderly re-positioning of the Fund's portfolio of assets ensuring that there is adequate liquidity whilst preserving or realising the value of the assets.
We have concluded that this approach would represent the best outcome in terms of value, time and equal treatment for all investors. Importantly, it would allow all investors to choose, whether they wish to remain invested in or to withdraw their investments from the Fund. The work that is underway to re-position the portfolio is designed to ensure that there are liquid assets available for these purposes, while continuing with the objectives and investment strategy of the Fund. [...]
3.10pm BST
Investors in Neil Woodford's flagship fund will be unable to get their money back until early December, administrator Link Fund Solutions has said.
The Woodford Equity Income Fund suspended withdrawals from the fund on 3 June, and extended that suspension on 1 July.
2.53pm BST
Where does this all leave the Bank of England, due to publish its latest inflation report and monetary policy on Thursday?
With the European Central Bank and the Federal Reserve planning interest rate cuts to stimulate their slowing economies, the Bank is expected to hold its policy steady. Yet its assumption of a smooth Brexit outcome will sound increasingly untenable if the government insists it will leave the EU without a deal.
Given the risks from Brexit and global trade tensions, we do envisage the MPC striking a cautious tone. But with inflationary pressures rising, rates already well below neutral, the pound still weak and fiscal stimulus looming, easing does not look justified. In any case, it would do little to offset the heightened uncertainty.
2.44pm BST
Hitting holidaymakers in the pocket as they head abroad during the school holidays, the pound has sunk by more than 10 cents against the dollar from a peak in excess of $1.33 in March.
Related: Pound drops to lowest level in two years amid no-deal Brexit rhetoric
2.40pm BST
Don't forget that the pound's weakness comes with the US Federal Reserve set to cut interest rates on Wednesday - usually a spur for the dollar to weaken.
The market-implied probability of a rate cut is 100%, with the consensus pointing to a 0.25 percentage point cut in the Fed's target range for the federal funds rate - the first in the decade since the financial crisis.
The E.U. and China will further lower interest rates and pump money into their systems, making it much easier for their manufacturers to sell product. In the meantime, and with very low inflation, our Fed does nothing - and probably will do very little by comparison. Too bad!
The Fed "raised" way too early and way too much. Their quantitative tightening was another big mistake. While our Country is doing very well, the potential wealth creation that was missed, especially when measured against our debt, is staggering. We are competing with other.....
....countries that know how to play the game against the U.S. That's actually why the E.U. was formed....and for China, until now, the U.S. has been "easy pickens." The Fed has made all of the wrong moves. A small rate cut is not enough, but we will win anyway!
2.32pm BST
Wall Street has weakened slightly as markets open in New York.
The S&P 500 has lost less than 0.1% in early trades, the Nasdaq has lost 0.1% and the Dow Jones industrial average is basically flat.
2.25pm BST
The demand for British government debt has risen as no-deal Brexit fears have taken centre stage.
The yield on the UK 10-year gilt, the benchmark rate for government borrowing, hit 0.628% on Monday afternoon, the lowest since September 2016.
2.10pm BST
Boris Johnson is speaking (on a trip to Scotland), and his words appear to be putting even more pressure on the pound: it has taken another leg lower.
1.58pm BST
The field of European candidates to lead the International Monetary Fund (IMF) has narrowed to three, the Financial Times () reports.
New: there are now three Europeans in consideration to lead the IMF. The field has been narrowed to Jeroen Dijsselbloem, Olli Rehn and Kristalina Georgieva. Calvino and Centeno both knocked out which suggests softening in southern European objections to "northern" MD at the fund
Picking Georgieva would require a change to the bylaws of the IMF which prevent an incoming managing director being 65 years old or above. There was no consensus to change the law at an IMF meeting last Friday but officials involved say it can be done at any time in the process
1.20pm BST
Another big deal on a day of mega-mergers: US drug company Pfizer is buying Mylan in an all-stock deal and combining the $10bn generic pharmaceutical company with its own off-patent branded and generic business.
1.06pm BST
The pound has fallen further as American traders get to their desks: it has now hit a low of $1.2282 against the US dollar, a decline of 0.8% over the course of the day.
That is the first time that the pound has fallen below $1.23 since mid-March 2017.
12.37pm BST
The mid-cap FTSE 250 has followed the lead set by its weightier counterpart in rising by 0.4% - despite two big dents.
The pain for Sports Direct has lessened somewhat, with shares now down by 9% following its announcement late on Friday evening.
12.24pm BST
The pound just came within a whisker of that $1.23 mark - it traded at $1.2301 against the US dollar, a loss of about 0.6% over the day. Sterling is down by 0.5% against the euro.
The FTSE 100 is now up by 1.5% for the day.
12.17pm BST
Digital bank Revolut has poached the finance director of Metro Bank, it announced on Monday.
David MacLean stepped down from the high street lender to join the London-based fintech firm.
11.55am BST
The FTSE 100 has gained almost 100 points, or 1.3%, to reach 7,640 points.
The index has been buoyed by the London Stock Exchange Group, up 14%, and Just Eat, flying along at a 30% gain.
Just Eat was a pure-play, high margin takeaway platform, focusing on restaurants that do their own delivery, but it is now investing in its own delivery as competition takes its toll. Uber will dominate the smartphone real estate, as its Taxi app will accelerate the distribution of its Eats app. It can also take advantage of a fast-growing, captive audience inside the taxis themselves by making timely suggestions.
Moreover, as Uber opens its platforms to restaurants that do their own delivery, its margins will improve, while Just Eat's diminish as it does the opposite.
Whilst technology can cross borders, other issues which are specific to each country such as taxes, traffic, urban settlement patterns and customer expectations would explain why an international tie-up is preferable compared to pushing into a new market and having to redesign systems to cope with local variations.
11.23am BST
A big media job move today: the boss of the company that owns the Mirror, Express and Star newspapers will step down to be replaced by a former betting executive.
Simon Fox, the chief executive of Reach (formerly Trinity Mirror), will be replaced by the former Ladbrokes Coral boss Jim Mullen, writes the Guardian's Mark Sweney.
Related: Simon Fox to step down as chief of Daily Mirror owner Reach
10.55am BST
An update on Neil Woodford has come through this morning: the investor could be kicked out as manager of the fund he founded.
10.33am BST
The number of Boeing 737 Max planes available to Ryanair next summer could fall to zero unless the planemaker "gets its shit together", Michael O'Leary said, according to Reuters.
The Ryanair boss has never been one to hold back, and says that Airbus - Boeing's major rival - has cut prices. "The world has moved in their favour," O'Leary said.
10.27am BST
Ryanair boss Michael O'Leary has warned that the airline will not rule out making job cuts if the return to service of the Boeing 737 Max plane is delayed further.
10.16am BST
Connor Campbell, financial analyst at Spreadex, a spreadbetting firm, said:
It is effectively a worst-case-scenario end to July for the pound, one that sets up three months of intense Brexit anxiety heading into All Hallows' Eve.
10.10am BST
Will we see the pound below $1.23 today? The day's low point is now $1.2318 against the US dollar.
Analysis by US investment bank J.P. Morgan suggests it could get worse for the pound before it gets better.
Dialogue with the EU is ongoing but is likely to prove fruitless, and may segue into a general election and subsequent extension of Article 50 later this year. In the interim, the expectation is for him to push toward a "no deal" outcome as negotiations make little progress.
Layering Brexit concerns with downward momentum in the local economy and a concerning balance of payments setup should therefore allow GBP shorts to extend yet further.
9.52am BST
The Bank of England also published its latest mortgage data on Monday, showing that banks approved lending for 66,400 house purchases in June - 800 more than the previous month and slightly more than economists had expected.
Net mortgage borrowing for the month by households was 3.7bn, close to the average of the previous three years, the Bank said. This followed a slightly weaker net flow of 2.9bn in May.
9.48am BST
British consumer borrowing growth slowed in June to a five-year low, according to new Bank of England figures published on Monday.
9.37am BST
The dealmaking and the weak pound (which boosts multinationals' foreign currency earnings) have helped the FTSE 100 to a flying start to the week.
London's benchmark index is now up by 1% at 7,628 points, after shortly after hitting its highest point since August 2018.
9.27am BST
Takeaway.com's swoop for Just Eat may not be a done deal, however.
"It is a possibility that Delivery Hero could table a rival bid," say analysts at Canaccord Genuity.
Related: Just Eat agrees 9bn merger with Takeaway.com
9.23am BST
The Just Eat/Takeaway.com deal "makes sense in the long term," said analysts at Barclays.
Just Eat chief executive Peter Duffy* is understood to be on his way out of the company, which will instead be led by Takeaway.com's boss Jitse Groen.
Just Eat shareholders would be getting the best operator in the space to run the business - a notable shift from missed execution from management in the last few years.
We are believers in the value of being a global player increasing in time, with more cash flow to fight off rising competition and tech platform synergies getting more and more relevant. This is a unique opportunity to build scale and that should benefit both parties in the long term.
9.19am BST
Some important details on the Just Eat deal: the new company will be headquartered in Amsterdam (the home of Takeaway.com).
However, it will still be listed on the London Stock Exchange, where Just Eat is currently a member of the FTSE 100, with a "significant part of its operations" in the UK.
The key feature of the combination of Just Eat and Takeaway.com is the limited geographic overlap between the companies. Therefore there will be limited consolidation of market shares in their combined markets.
The companies would share best practice and know how etc. to help improve profitability to invest further behind their less profitable markets and fund the fights for market share in what is likely to be a very competitive market.
9.04am BST
The sell-off in sterling is gathering pace: the pound has now lost 0.34% against the US dollar and 0.3% against the euro.
It's now a new low of $1.2330 for the pound against the dollar. That is now the lowest since 16 March 2017 - before new Conservative backbencher Theresa May triggered Article 50 and her disastrous decision to call a general election.
8.48am BST
Remember the "magic money tree"? The Conservative party appears to have found it, if the rash of spending promises of new Prime Minister Boris Johnson are anything to go by.
This isn't money sitting in a savings account waiting to be spent. It's more like borrowing from an overdraft where the limit is set at 2% of annual income. So spending it would result in a higher deficit and more borrowing.
Related: Boris Johnson says he'll spend, but who will pay?
8.32am BST
The London Stock Exchange Group has also enjoyed a strong morning on the weekend's merger talk: shares are up by 13% at the time of writing.
LSE boss David Schwimmer (not that one) has been in the job for just over a year, but has clearly taken a leaf from Xavier Rolet, his predecessor, in going for big deals.
8.23am BST
At the other end of the scale from Sports Direct, Just Eat 22% shares have popped by 22% following the news of the proposed takeover by Dutch competitor Takeaway.com.
8.11am BST
Sports Direct shares have fallen by as much as 20% after the retailer issued an extraordinary results statement on Friday that revealed massive tax bills, poor trading and a retail industry warning.
Related: The state of Sports Direct: key points from results statement
8.03am BST
The FTSE 100 has gained 0.1% at the open, but European markets are struggling a bit more.
The Euro Stoxx 600 index is down by 0.2%, led by the 0.2% declines on Germany's Dax and France's Cac 40.
7.53am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Boris Johnson may have achieved his ambition of getting into 10 Downing Street last week, but financial markets have served an early reminder at the start of his first full week in office that he has a daunting task ahead of him.
A general election in the near term now seems a high likelihood outcome.