European stocks were down but erased most of their intraday losses at yesterday’s close, even as the latest terror attack in France dragged travel shares lower.
The Stoxx Europe 600 Index closed less than 0.2% lower, paring an earlier drop of up to 0.7%. Travel and leisure shares posted the biggest slide, with Easyjet, Thomas Cook, and hotel operator Accor down at least 2.7% after the atrocity in Nice.
Sterling weakened against most of its group-of-10 peers as Bank of England chief economist Andy Haldane signalled policy easing will likely be required to bolster the UK economy after the country voted to leave the EU.
The pound pared its best week since March against the dollar, having advanced earlier as the appointment of Theresa May as prime minister returned a sense of political stability to the UK and the Bank of England unexpectedly kept interest rates unchanged.
“Once we got the stronger data we’ve seen general dollar strength across the board,” said Bilal Hafeez, global head of foreign- exchange research at Nomura Holdings in London. “It turned against most of the currencies, including the euro and the pound.”
Sterling declined 1.1% to $1.3194 having climbed earlier to $1.3481, the highest since June 30. That pared this week’s gain to 1.9%, the most since March 4. Sterling weakened 0.6% to 83.81p per euro. It strengthened 1.7% in the week, the most since May 27.
The UK currency’s rally this week came after it fell to the lowest level against since 1985 against the dollar last week, and it remains about 11% lower since last month’s Brexit vote.
Even with the decline on Friday, the pound strengthened against all but one of its 31 major peers this week amid a clearer political landscape in the UK after Ms May took office and appointed a new cabinet.
Europe’s benchmark index climbed in three of the past four sessions, sending the gauge to a weekly gain of 3.2%. It has rebounded since a June 27 low as optimism grew central bankers will act to limit the fallout of Britain’s EU decision and some earnings reports beat estimates.
The gains haven’t been enough to overcome losses from the Brexit vote, and technical indicators are signalling more challenges ahead.
London’s FTSE-250 index was down by 0.36% yesterday, with a similar dip seen in Paris, while Frankfurt’s Dax fell by 0.01%.