FTSE 100 drops on weak oil prices and a strong pound, but is set for best week since June

A man wearing a protective face covering to combat the new coronavirus walks along a quiet street in London, England, on November 10, 2020.

tolga akmen/Agence France-Presse/Getty Images

London stocks fell on Friday as the pound rose and weaker oil prices weighed on shares of heavily weighted energy companies.

The FTSE 100 index

dropped 0.5% to 6,307.67, but was still set for a 6.7% rise for the week, which would mark the best return since June. Optimism over a COVID-19 vaccine from drugmaker Pfizer


and partner BioNTech


drove gains in London, as well as global markets.

Weighing on the index was a strong pound, as it makes goods sold by international companies that derive revenue overseas less competitive.


rose 0.3% to $1.3155, in a week that is expected to end with little change for the currency.

The move comes after Prime Minister Boris Johnson’s top adviser Dominic Cummings told the BBC late on Thursday that he planned to be “largely redundant” by Christmas. 

“The claims that Dominic Cummings will leave his role at Downing Street followed infighting within Johnson’s inner circle and represents a blow to Brexit hard-liners,” said Ricardo Evangelista, senior analyst at ActivTrades.

“Given the continued uncertainty surrounding the outcome of the post-Brexit negotiations with the EU as well as the bleak economic and the continuing health care crisis in the country due to coronavirus, the fact that investors are this morning backing the pound suggests the departure of Cummings means there is an increased likelihood of a softer break from the EU,” Evangelista told clients in a note.

Read: Bids to buy U.K. firms to get harder as ministers shut out ‘back door’ takeovers from countries like China, Russia and U.S.

Elsewhere, a 1% drop for oil prices


weighed on shares of Royal Dutch Shell
down 1.5% and BP

off 1.4%.

“A meeting of OPEC [Organization of the Petroleum Exporting Countries] at the end of the month to discuss production quotas looks an increasingly high stakes affair. Members of the oil producers’ cartel, and their affiliate Russia, will have a real balancing act as they try to judge what impact vaccines might have on the global economy,” said AJ Bell investment director Russ Mould, in a note to clients.

“Still, it is worth keeping the profit-taking of the last two days in perspective. Investors’ perspective on the outlook has definitely been shifted in a positive direction by the vaccine breakthroughs and there is the promise of more news in this area in the weeks to come,” he said.

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