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Home/UK travel stocks soar as brexit is delayed

UK travel stocks soar as brexit is delayed

The pound reacted sluggishly to the extended deadline for the UK’s exit from the EU as the UK's currency fell against the euro and the dollar

UK travel stocks greeted the delay to Brexit positively on Thursday, as the deadline to leave the European Union was pushed back until after the crucial summer period.

The relative certainty brought by the decision to extend Article 50 led to the sector providing the top three biggest gainers on the FTSE 100 index on the day.

EasyJet climbed more than 8% to 1144.5p, German travel company Tui was up over 8% to 775.4p, while British Airways owner International Airlines Group (IAG) surged nearly 6% to close at 544.4p.

Chief executive of the Airport Operators' Association, Karen Dee said that while they are well-prepared for a no-deal scenario with clear measures in place to continue flights between the UK and EU, they recognise the wider uncertainty around a no-deal scenario. The extension will give people confidence to book their holidays or business travel plans with total confidence, knowing that nothing will change to travel arrangements in the coming months.

David Madden, market analyst at CMC Markets UK, said, it seems that consumers and the company's management can act with a bit of certainty in the busy summer period.

Overall though, London's blue-chip index was flat - closing 3.96 points or 0.05% to 7,417.95.

Meanwhile the pound also appeared oblivious to the day's political developments as it dipped 0.04% to €1.160 and went down 0.15% against the dollar to $1.307.

Connor Campbell, financial analyst at Spreadex, said sterling was "neither tricked nor treated". He added that both the currency and businesses alike now want to see some actual, tangible, anxiety-easing progress towards an exit plan, not just a rehash of May's despised deal.

Sterling, as well as UK and European equities, would have been expected to thrive after news that the possibility of a no-deal Brexit had ended - at least for now.

But any gains were offset by the fears that Prime Minister Theresa May could be replaced during the long extension, with her replacement ushering in a new era of uncertainty.

Chris Turner, head of foreign exchange strategy at ING, said that the extension is unlikely to improve business confidence much, thus limiting the upside to GBP.

The rising probability of a change in Conservative Party leadership ahead of the new October deadline suggests a difficulty for EUR/GBP to move below the 0.85p level, he predicted.

Societe Generale currencies analyst Kit Juckes said that it isn't brilliant for the economy, to add uncertainty on top of uncertainty.

Elsewhere in Europe, the DAX in Germany closed up 0.3% to 11,935.20.

France's CAC 40 rose 0.3% to 5,464.85.

Ireland's Brexit-sensitive ISEQ stock index closed up 0.62%, and the pan-European STOXX 600 index was flat.

Brexit was not the only factor in the subdued nature of the markets.

Elsewhere, Chinese markets were down, as were those in Hong Kong and Australia, the latter after the prime minister called a national election for next month.

US markets were up slightly on opening, only to dip after healthcare stocks dragged them down. Some gains in financial stocks helped mitigate some of the losses, ahead of earnings reports from some Wall Street giants.