Sat. Nov 28th, 2020

Pound hits 31-month high as Conservatives hold election lead – business live

Rolling coverage of the latest economic and financial news, as the Conservative party extends its lead over Labour to 14 points

12.46pm GMT

Rupert Thompson, Head of Research at Kingswood, says smaller UK companies could see their shares rally after a Tory win — which looks probable, but not certain.

A Conservative victory is still not a done deal given the scope for significant tactical voting and the poor performance of the polls in recent elections. Indeed, UK equities overall have struggled to build on their burst of outperformance in October as the risk of a No-Deal Brexit faded. Within the UK market, by contrast, the prospect of a Conservative victory and an orderly Brexit departure are being embraced rather more enthusiastically.

Mid and small cap stocks have outperformed their large cap counterparts by around 10% and 5% respectively since mid-October, benefiting from their greater exposure to the domestic UK economy. If the Conservatives do end up with a majority, we would see scope for the pound recovering somewhat further to maybe $1.35 and some renewed outperformance by UK equities. Small cap stocks should also outperform further, as valuations continue to look cheap relative to large caps.

12.34pm GMT

In other news, the battle for takeaway company Just Eat rumbles on.

Amsterdam-listed Prosus has hiked its offer for the FTSE 100 firm, to over £5bn, which rival bidder has dismissed as ‘derisory’. Here’s the latest:

Related: Just Eat: Prosus ups offer to £5.1bn in battle

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