Pound rallies to four-week high against euro as investors mull over Brexit; Lloyd's of London confirms new EU  subsidiary

Morrisons, Britain’s fourth biggest supermarket chain, rallied to a three-week high after Bank of America Merrill Lynch upgraded its rating to “buy” citing an “unparalleled balance sheet”.

The US investment bank crowned Morrisons, which trails market leader Tesco, Sainsbury's and Asda in annual sales, as the “winner of the supermarket sweep”.

Analyst Kiranjot Grewal said: “Morrisons is the most attractive name amongst the UK food retailers on a cash flow measure.”

Along with boasting one of the strongest balance sheets in the sector, the bank also said it has a capital light growth plan, self-help opportunities and has one of the most attractive cash flow valuations.

The supermarket’s recent strategic moves, including a new wholesale partnership with Amazon and Rontec and the renegotiation of its Ocado contract, are will bolster future earnings, the bank said.

The upgrade comes three weeks after the FTSE 100 firm delivered its first rise in annual profits in five years, but warned more expensive food imports were creating uncertainties. Shares closed 5.1p higher at 242.3p.

Elsewhere, the retail sector came under pressure as UBS downgraded Marks & Spencer’s rating to “neutral” and lowered its price target to 340p from 390p as its Evidence Lab research team became more cautious on its clothing and food divisions. The FTSE 100 stock fell 4.1p to 331.4p.

UBS also targeted N Brown Group, the retailer behind the niche Simply Be, Jacamo and JD Williams fashion brands, sending shares 8.5p lower to 208p. The investment bank lowered its rating to “sell” citing its latest consumer survey which highlights a substantial slowdown in spending expectations in the next 12 months on clothing.

Meanwhile, Barclays began covering Dixons Carphone with an “overweight” rating and Next at “underweight”. Analysts  believe Next has “a long way to go” as it brings its website and app capabilities in line with expectations. Next dipped 60p to £42.60, while Dixons Carphone added 5.6p to 316.7p.

Barclays also initiated coverage on B&Q owner Kingfisher with an “underweight” rating. Shares drifted 0.5p lower to 325p as the bank warned Kingfisher could face “a difficult year” due to macroeconomic headwinds in both the UK and France.

Away from the retail sector, the FTSE 100 ended the day in the red, down 4.2 points, or 0.06pc, at 7,369.52, weighed down by a stronger pound.

A number of stocks were trading ex-dividend which also hurt the index.  Schroders fell 54p to £30.40, British Land slipped 9.5p to 592.5p, Old Mutual skidded 2.7p to 216.9p, Prudential lost 21p to £16.87 and Smith & Nephew ended the day down 20p at £12.18.

On the other side, Liberum began covering Ashtead with a “buy” rating citing upside potential from increased rental penetration in the US market. It also believes the equipment hire firm is well placed to deliver underlying revenue of 9pc per annum. Shares jumped 40p to £16.78.

Advertising giant WPP enjoyed a boost, up 20p to £17.35, after Morgan Stanley moved its rating to “overweight” for the first time since 2012, while broadcaster ITV rose 1.1p to 211.4p despite Berenberg reiterating its “hold” rating. Analysts believes nervousness about the company’s short-term outlook could increase now that Article 50 has been triggered.

Elsewhere, cigarette maker Imperial Brands eked out gains of 16p to £38.42 after it stuck to its full-year guidance.

On the mid-cap index, strong full-year results lifted Polypipe Group 19.2p to 372.5p, while miner Petra Diamonds bounced 12p to 135.8p after it announced a restructuring of its debt facilities.

Plastics company RPC became an unlikely laggard, slumping 68p to 811p, after it said its full-year revenues are expected to be “significantly ahead” of last year. Despite boasting eight “buy” ratings, traders attributed a repeated “sell” recommendation from Northern Trust for its afternoon slide.

Finally, Savannah Resources climbed 5.1pc following a positive licensing update from its copper projects in Oman, where mining is on track to start by the end of the year.

With that, it's time to close. I'll be back again tomorrow from 8.30am. 

The FTSE 100 ended the day in the red, bucking the wider trend in Europe. The afternoon pound strength kept the UK's blue chip index in negative territory. 

By close of play: 

• FTSE 100: -0.06pc
• DAX: +0.44pc
• CAC 40: +0.41pc
• IBEX: +0.37pc

Joshua Mahony, of IG, weighs in on the potential corporate relocations in the wake of the Brexit trigger: 

"Just one day after article 50 and it is becoming increasingly apparent that this has been a trigger for a number of firms to set contingency measures into action.

"Lloyds of London’s decision to relocate jobs to Brussels, coupled with rumours of potential relocations for the likes of Citi and JP Morgan do little to inspire confidence in the City of London. There is no doubt that London will be the main loser from the coming two years of negotiations, much in the same way it was the UK’s main beneficiary from our EU membership. While the UK’s loss may be the EU’s gain in the short-term, the long-term picture of a more open, globalised UK should mean that perhaps the EU and the UK will be  better off further down the line."

After this morning's announcement that Lloyd's of London is establishing an EU hub in Brussels and reports that JP Morgan is relocating 1,000 staff from London to Dublin, another report has surfaced suggesting Citi is preparing to relocate jobs from the UK.

The report in the Financial Times suggests that Citi could create a new broker dealer entity in the EU. 

​Read the FT's report here

As the pound inches higher on the back of the pound weakness, it continues to weigh on the FTSE 100, which is mostly comprised of international dollar earners. 

The blue chip index remains 0.18pc lower with just over half an hour to go until trading closes for the day. 

 Jasper Lawler, of London Capital Group, said: "Stocks are still in a bit of a holding pattern with traders lacking a bit of conviction to follow through on the last two days of dip-buying. A positive open in the US, helped by further recovery in crude oil prices improved sentiment in European markets by the afternoon.

"A bigger than expected fall in German inflation during March assured investors who have been buying the country’s shares in hopes of an extended period of easy money policies. The German benchmark DAX index touched a two-year high for a second day.

"The resilience of the British pound in the face of Article 50 uncertainty was probably the biggest factor behind the underperformance of the FTSE 100. Fund manager Schroders was the biggest loser while Ashtead Group was top gainer."

Europe's Stoxx 600 has extended its gains in afternoon trade buoyed by a bounce in energy stocks. It climbed by 0.35pc to 379.86, marking its highest level since December. 

Shares in Imperial Brands advanced 0.5pc after it stuck to its full-year guidance. Bradley Gerrard reports: 

The amount of cigarettes sold by tobacco giant Imperial Brands looks to have declined once again in the first half of its 2017 financial year.

Guidance for the maker of Gauloises and Winston cigarettes remains on track for the full year but management admitted in a trading update that sales in the first half had been “driven primarily by a deterioration in industry volumes following strong industry volumes last year”.

Imperial said that for the half-year ending in March, the selling price of its cigarettes and the mix of sales from various price points was flat on the prior year.

Management announced in November a plan to invest £300m in 2017 in its "growth and specialist brands divisions". The former division includes Davidoff and Lambert & Butler cigarettes, while the latter includes premium cigars and e-cigarettes. 

“The early results of our investment programme are encouraging, with improved market share trends in many of our priority markets,” Imperial said.

The investment is predominantly being made in the first half, resulting in lower revenue and profit on a constant currency basis, but the second half is expected to be stronger.

Read the full story here

The pound has extended its gains against both the euro and dollar a day after Article 50 was triggered. 

Markets largely shrugged off yesterday as it was a well-flagged event. Today the pound is trading 0.87pc higher against the euro at €1.1647, marking a four-week high. 

Against the dollar, its gained 0.83pc at $1.2513 due to a weakening dollar. 

There was little movement as the opening bell sounded on Wall Street after US fourth quarter GDP was revised upwards to 2.1pc. 

At the opening bell: 

• Dow Jones fell 5 points
• Nasdsaq dropped 0.81 points
• S&P 500 lost 0.46 points

The number of US weekly claims for state unemployment benefits slipped by 3,000 last week to a seasonally adjusted 258,000, data from the Labor Department showed today. 

Claims have now been below 300,000, a threshold associated with a healthy labor market, for 108 straight weeks. That is the longest stretch since 1970, when the labor market was smaller.

US economic growth slowed by less than expected in the fourth quarter, data from the Commerce Department showed today. 

Fourth quarter US GDP increased at a 2.1pc annualised rate, higher than the previously reported 1.9pc increase, in its third GDP estimate for the last three months. 

The government also said that corporate profits after tax with inventory valuation and capital consumption adjustments increased at an annual rate of 2.3pc in the fourth quarter after rising at a 6.7pc pace in the third quarter.

Europe's oil and gas stocks index spiked 1pc higher this afternoon after Kuwait's oil minister said Kuwait and other countries supporting extending the Opec supply cut deal, which started in January. 

He said that Opec must consult with some countries first over the extension of the supply pact in order to reach a consensus by May. 

Shares in online retailer AO World have bounced 3.6pc after it raised £50m to underpin its balance sheet as it navigates an uncertain outlook in Britain. Julia Bradshaw has the details: 

AO World, an online seller of white goods and electronics, has raised £50m through a share placing and will use the money to support growth plans and bolster its balance sheet.

Steve Caunce, chief executive, said the additional cash would come in handy as AO World increases its scale, including plans to expand into countries bordering Germany.

"The strength in our UK business and our investment in mainland Europe have positioned us well for the future, and this will be further strengthened by the capital raising," he said.

AO World already has £27m of net cash in the bank, but the additional funds, which are not earmarked for a particular purpose, will further boost the balance sheet and support the business against an uncertain retail backdrop. 

"It's not so much that they need the money, but they want the flexibility of a stronger balance sheet," said a person familiar with the company.

Mr Caunce added: "This will provide improved flexibility to take the right commercial and investment decisions for the growth of the business, with fewer financial constraints."

Read the full story here

German consumer inflation slowed more sharply than expected in March, data showed on Thursday, taking some pressure off the European Central Bank to wind down its monetary stimulus soon.

German consumer prices, harmonised to compare with other European countries (HICP), rose by 1.5pc on the year after reaching a 4-and-a-half year high of 2.2pc in February, the Federal Statistics Office said.

The March reading marked the first slowdown in annual inflation in nearly a year and came in weaker than a Reuters consensus forecast of 1.9pc.

On a non-harmonized basis, annual inflation slowed to 1.6 percent from 2.2pc in February. 

Rising energy prices and higher food costs were again the main drivers behind the overall increase but they both rose less sharply than in February, a breakdown of the non-harmonized data showed.

The ECB has slashed interest rates into negative territory and adopted a bond-buying programme worth €2.3 trillion to pump money into the region's economy.

ECB policymakers have said the central bank needs to see if inflation rises at the start of the year are sustainable in the medium term before considering changing policies.

Report from Reuters

US stocks are poised for a negative open as investors await key economic GDP data, including US GDP numbers.

A number of Fed officials are also due to speak today. Cleveland Fed President Loretta Mester, Dallas Fed chief Robert Kaplan, San Francisco Fed head John Williams and New York Fed President William Dudley are all scheduled to make appearances.

Here are the opening calls courtesy of IG: 

Bank of England backs palm oil to replace animal fat in plastic £20 note. Szu Ping Chan has the details: 

The Bank of England has backed the use of palm oil in its new £20 note following a backlash from vegans and religious groups over the use of animal fat in the plastic £5 note.

The Bank said the world's most commonly used vegetable oil was the "only practical alternative" to tallow, following considerations about cost and availability.

Launching a public consultation on how future plastic banknotes should be made, the Bank estimated that using palm oil instead of tallow would add around £5m to production costs over the next 10 years of around £300m.

It said palm oil offered a "mature supply chain and is available at reasonable cost".

The Bank has started "extensive testing" of palm oil to ensure it meets "technical and operational requirements". The tests are expected to conclude this summer.

Read the full story here

Shares in agriculture and engineering firm Carr's have plunged 18pc  to 124.8, putting it on track for its third-worst day ever, after it warned that full-year results will be significantly below forecasts. Julia Bradshaw reports: 

Shares in agriculture and engineering group Carr’s dived by as much as a third after it revealed that contract delays and a weak cattle market in the US meant profits for the year would fall significantly below expectations.

The group had hoped that cost cutting and winning new work would offset problems with major contracts in its UK engineering business, but a weak oil and gas market, which is its main source of business, made it difficult to secure new customers.

This was compounded by squeezed margins and lower volumes at Carr's US feed block business. Farmers there are under pressure from falling cattle prices, which will result in “significantly reduced profitability” in the short to medium term, the company said.

The news prompted analysts to slash their full-year profit forecasts by 20pc to £11.3m, sending the shares tumbling.

“We expect consensus pre-tax profit will fall to around £11.3m from £14.4m, with a £3m hit expected in each division, offset by a degree of over-performance in remote handling and UK agriculture,” said Edward Hugo, head of research at VSA Capital.

Read the full story here

Investors mulled over the implications of Brexit as they awaited the negotiating guidelines sending shares into the red by midday. 

Here's a snapshot of the current state of play: 

• FTSE 100: -0.27pc
• DAX: +0.08pc
• CAC 40: -0.06pc
• IBEX: -0.12pc

 Connor Campbell, of SpreadEx, said: "Thursday’s lifeless trading persisted this morning, investors continuing to be broadly unmoved by the triggering of Article 50.

"The FTSE has so far shrugged its way through the day, now finding itself down by around 5 points having been up a similar amount earlier in the session. The slight reversal from the UK index likely stems from the emergence of some (very) mild growth from the pound, which is now flat against the dollar and up 0.2pc against the euro." 

The European Central Bank could start winding down its massive asset buying scheme earlier than planned but only if the economy continues to outperform expectations, Dutch central bank chief Klaas Knot said otoday.

The eurozone economy, on its best run in a decade, has already performed better than projected for the most part since September and the strong run could still continue, Knot, a policy conservative who has opposed many of the ECB's past easing measures, told a news conference.

"Only if the economy does even better than we now expect in our estimates could we consider bringing the tapering forward,” Knot said, referring to the ECB's plans to buy €60bn euros worth of bonds each month until the end of the year.

"But since September last year, the economic surprise indexes have turned round and are on quite a high level," Knot said. "They are better than our expectations. And why shouldn't that continue in the rest of the year?"

The ECB plans to buy at least €2.3 trillion worth of bonds, all in the hope of cutting borrowing costs to revive growth and ultimately generate inflation.

Knot added that even if the asset buys continue until the end of the year, as now planned, they should then be wound down as soon as possible in 2018.

But he dismissed calls by some policymakers to review the bank's guidance for keeping rates at their present or lower levels until well after the asset buys end.

"I think this sequence makes sense, the forward guidance makes sense and I don't see a need to revisit that now,” Knot said.

"It's a (sequencing) that has also been applied in the U.S. and the UK when exiting, and the logic is one of a consistent communication message which is neutral along the yield curve and which prevents giving conflicting views as to the front end and the long end of the yield curve."

Report from Reuters

Within five years self-driving cars will outpace laws and be ready to make life-or-death decisions. Our industry editor Alan Tovey reports: 

Self-driving car technology will outpace laws with cars able to make life or death decisions within five years, but regulation on deciding who is responsible for crashes will be unable to keep up.

The warning came from Ian Robertson, board member at BMW, who raised the prospect of slow-moving legislation holding back development of so-called “autonomous” cars.

“Autonomous vehicles will be capable of making decisions in the event of an accident that could result in life or death,” said the highest-placed Briton at the German car giant. “But I don’t think we will reach a stage where regulation can match that.”

He was speaking at the Society of Motor Manufacturers and Traders’ Connected conference, which examines the how new technology is revolutionising the car industry, with the advances estimated to be capable of growing the $2 trillion-a-year global industry to as much as $10 trillion.

Read the full story here

We get German inflation figures at 1pm, but weak initial readings of German regional inflation has pushed the euro down to a nine-day low against the dollar. 

The single currency has slipped 0.3pc to $1.0735 against the dollar after German state Saxony reported a slump in annual inflation to 1.8pc to 2.4pc a month ago. 

The FTSE 100 has turned negative in mid-morning trade after a rather subdued start to the day. 

There are a number of stocks trading ex-dividend which has weighed on index. Schroders is off by 2.1pc, British Land is down by 2pc, Ol Mutual has lost 1.2pc, Prudential has surrendered 1.5pc and Smith & Nephew has fallen 1.7pc.

Henry Croft, of Accendo Markets, said: "Global equities are mixed again this morning with small gains for Europe at odds with minor losses on Wall Street. Markets have clearly calmed after all that mid-week excitement. Foreign exchange markets remain in focus after the UK's official triggering of Article 50, although with details of the negotiating hands of both parties still sparse, market movement is minimal at best." 

The Irish Independent is this morning reporting that US investment bank JP Morgan is considering relocating employees from London to Capital Dock in Dublin. 

The 31,600 sq m (340,000 sq ft) office scheme currently being developed by Kennedy Wilson in Dublin's docklands could potentially house around 1,000 employees, the Irish Independent reported this morning.

 Meanwhile, Bloomberg reports the same story citing "people with knowledge of the matter".

JP Morgan said in a statement to Bloomberg:  “Other options are still very much on the table. We want to see how negotiations progress.

“No final decisions have been made.”

While its dipped against the dollar, the pound has climbed higher against the euro as investors awaited the EU's response to yesterday's triggering of Article 50. 

It is trading up 0.36pc on the day at €1.1583.

Eurozone economic sentiment was virtually unchanged in March against forecasts of a rise, dipping slightly as confidence in industry and services fell, while inflation expectations surged, EU data showed this morning.

The European Commission's monthly sentiment survey showed the overall index for the 19-country currency bloc dropping to 107.9 points in March from 108.0 in February and below expectations of a rise to 108.3.

A separate business confidence indicator, which points to the phase of the business cycle, was stable at 0.82 points in March on the month, remaining at the highest level since June 2011 but below market expectations for an increase to 0.86.

Inflation expectations went up among consumers and manufacturers, in a new sign that price trends in the euro zone are back to a stable growth path and putting pressure on the European Central Bank to end its monetary stimulus.

The consumer index of price trends over the next 12 months went up to 15.3 points from 14.5 in February, the highest since October 2013.

The indicator for selling price expectations among manufacturers also rose to 9.8 points from 9.0 in February, the highest since July 2011.

The slight decrease in overall economic sentiment was mainly caused by less optimism in the services sector, the largest in the euro zone economy, where the index dropped to 12.7 from 13.9 points, and in industry, where it fell to 1.2 points from 1.3 in February.

The drop of confidence in the two main economic sectors of the bloc was partially offset by more optimism among consumers, where the reading was at -5.0 points, confirming earlier flash estimates, and below the -6.2 points recorded in February.

With the FTSE 100 eking out gains of 0.04pc this morning, Chris Beauchamp, Chief Market Analyst at IG, says markets remain quiet, as investors continue to search around for "a reason to buy into equities". 

"When Article 50 day is not particularly exciting, it doesn’t bode well for the following day.

"The quarter end continues to provide some levitation, as fund managers look to spruce up their performance, but this is still a market in search of a reason, either to rally or to fall."

Meanwhile, Amplify Trading's head of trading Piers Curran recaps on the triggering of Article 50. He reckons yesterday will be the most important day for the UK until two years time when we actually leave the EU. Have a listen to his morning briefing below: 

The pound is drifting lower this morning as investors mull over the implications of Brexit. 

After a subdued reaction to yesterday's triggering of Article 50, the pound dipped 0.17pc to $1.2412.

Sterling, which touched an eight-day low of $1.2377 in Asian trading yesterday, climbed 0.2pc to $1.2478 upon confirmation that Article 50 had been triggered. However, in afternoon trade, it slipped back to a low of $1.2403. In March, the pound has traded within a range of $1.21-$1.26 against the US dollar.

Jeremy Cook, of World First, said: "You would not have been able to parse from those ups and downs that the UK has now triggered Article 50 and the process of Brexit has now begun." 

Lloyd's of London confirmed the plan to establish a new EU subsidiary, as it released its latest annual results this morning.

Speaking to the BBC this morning, chief executive Inga Beale explained the reasons the 329-year-old insurance market chose Brussels for its EU base: 

"We wanted to have a top quality regulator.

"We also wanted to have great access to talent. We need to hire some really great people and we felt that was a really great place to go.  

"And also we've got to think about things like accessibility, how easy it is to get from London to somewhere on the continent and how easy it is from elsewhere in the continent to get to that place.

"We also wanted to consider the likelihood of that country staying in the EU in the future because that's an important factor as well." 

According to Belga newswire, commenting on Lloyd's of London's confirmation that it will open an EU hub, Belgian finance minister Johan Van Overtveldt said:

“Brussels’ position as a financial center is improving, which could inspire other insurers and specialized financial institutions for which Brussels already has a strong tradition." 

Bloomberg  highlights that British companies and international financial firms are considering how to continue serving European clients should the UK withdraw not just from the EU, but also from its single market and customs union, both of which can accommodate countries that aren’t in the bloc. 

It points out that back in January chief executive of Lloyd's of London Inga Beale said that she would push ahead with plans for a European headquarters outside of Britain after UK Prime Minister Theresa May stated the case for a so-called hard Brexit.

Naeem Aslam, of Think Markets, thinks Lloyd's of London confirmation of its new Brussels hub is "only the start". He reckons financial firms leaving the UK will grab "more and more headlines" in the coming days. 

Mr Aslam added: "Investors are going to pay a lot of attention to Brexit negotiations, and anything which indicates that these negotiations are not going anywhere is going to impact the financial sector. Hence, the financial sector is going to remain highly vulnerable. Restructuring at this scale is going to increase their cost.

"The firm’s annual profit was majorly impacted due to the scars of Brexit and we do not think that there is anything in these numbers which is exciting. Further damage for their bottom line profit figure was also due to the natural disaster of Hurricane Mathew and the Fort McMurray Wildfire in Canada."

He thinks that Lloyd's of London really needs to improve its claims and cost ratio and focus more on cutting cost.

Mr Aslam also points out that AIG, another major insurance player, could be coming out with similar news in the coming days. 

He added: "The firm has already indicated before that loss of passporting right is going to bring a major strain on their business, hence they do not have much of an option but to leave London."

Here are the key points to note about Lloyd's of London's confirmation that it will open an EU hub: 

• Lloyd's of London chairman John Nelson says Brussels subsidiary will employ "tens" of people, likely mixture of existing staff and new hires ;
• Nelson adds that Brussels subsidiary will have its own board, to employ staff in information technology, compliance;
• Brussels was chosen because of strong regulation, access to skilled staff, at heart of European Union, Nelson says;
• Nelson also thinks that it is too early to say if other insurers will follow Lloyd's to Brussels, but adds that other Lloyd's hubs have created own eco-system
• The EU subsidiary could offer opportunity to increase business in Europe, Nelson said;
• EU subsidiary will follow reinsurance model similar to other Lloyd's hubs, such as china Further company coverage. 

Insurance market Lloyd's of London is to establish a subsidiary in Brussels from 2019 to maintain a presence in Europe once Britain divorces from the EU. 

The company confirmed the plans as it unveiled its full-year results, with profits flat for 2016 after the firm wrestled with "extremely challenging" conditions driven by pricing pressures.  

Lloyd's decision to choose the Belgian capital as its preferred site for an EU base was made during a meeting of the firm's franchise board on Tuesday. 

It is believed the move will result in around 100 jobs being shifted from London, though that number could rise as the insurance market establishes itself in the Belgian capital.

It is understood that Luxembourg was also a strong contender on its shortlist, but was eventually ruled out alongside Malta and Dublin. 

Chief executive Inga Beale explained the reasoning behind the move to the BBC: "When the UK exits the EU, we will lose the ability to issue and provide insurance for our customers based in the EU."

Around 10pc of Lloyd's business is generated in the EU she added. "It's not moving our whole London base, it's just setting up an EU subsidiary."

Lloyd's of London chairman John Nelson told the Press Association last week that ''there's been a lot of enthusiasm from a number of EU countries for Lloyd's to come to their country'', and said that reputation for regulation was a factor in the selection process.

Lloyd's annual pre-tax profits came in at £2.1bn, the same as the year before, but gross written premiums lifted 11pc to £29.9bn over the period.

Read the full story here

The City was subdued this morning as traders mulled over the implications of Brexit, a day after Theresa May triggered Article 50. 

Yesterday's reaction to the triggering of Article 50 was largely subdued, with the FTSE 100 ending the day higher as sterling weakened. 

Let's take a look at how European bourses have fared in early trade: 

 Mike van Dulken, of Accendo Markets, said: "Calls for a flat open come after a mixed US close (S&P & Nasdaq up; Dow Jones lower) and a similar showing from Asia overnight. While Australia’s ASX benefits from the oil rebound and buoyancy among metals, extending its recent breakout, Japan’s Nikkei is failing to derive any benefit from this or a weaker Yen. GBP/USD off its overnight best levels may help UK blue-chips.

"After all the fuss about the UK triggering Article 50 yesterday, and opposition to PM May’s attempt to link a trade deal with security, focus has reverted to central bank policy outlook. This after media reports the ECB is concerned about misinterpretation of its last message (not hawkish it says), and how it is now reluctant to change its message end-April for fear of adding fuel to the fires of misunderstanding. Note also some optimism about the US administration trying another go at the Healthcare bill next week." 

Good morning and welcome to our live markets coverage. 

After the excitement of triggering Article 50 yesterday, the City is subdued this morning as traders await Brexit negotiating guidelines.

Yesterday, financial markets largely shrugged off the well-flagged formal triggering of the UK’s exit from the European Union.

The conciliatory tone struck in Prime Minister Theresa May’s letter to EU Council President Donald Tusk minimised volatility on currency markets, in what marked the start of an uncertain two-year process of negotiations.

Joshua Mahony, of IG, said: “ The lack of any real fire and divisiveness on either side will have no doubt been responsible for what was a fairly orderly day for the pound, all things considered.”

Sterling, which touched an eight-day low of $1.2377 in Asian trading, climbed 0.2pc to $1.2478 upon confirmation that Article 50 had been triggered. However, in afternoon trade, it slipped back to a low of $1.2403. In March, the pound has traded within a range of $1.21-$1.26 against the US dollar. Meanwhile, equities closed higher. 

This morning Lloyd's of London, the world's largest specialty insurance market, said that it has chosen Brussels for its European Union subsidiary because of its strong regulatory framework, confirming earlier reports.

Looking to the events of the day ahead, here's what is on the agenda: 

Full-year results: Anglo Pacific Group, Booker Group, SciSys, Amryt Pharma, Genel Energy, Tribal Group, Hilton Food Group, Polypipe Group

Interim results: DFS Furniture

Trading update: Booker Group, RPC Group, CMC Markets

AGM: Milestone Group, Cathay International Holdings

Economics: GfK consumer confidence (UK), nationwide HPI m/m (UK), unemployment claims (US), final GDP q/q (US), import prices m/m (GER)