The US dollar continues to weaken towards multi-year lows and this is impacting markets across Europe including the UK.

When sterling tanked following Brexit, the FTSE 100 made gains due to a majority of its constituents earning their money in other currencies. However, a reversal in the fortunes of the dollar doesn’t necessarily spell trouble for the UK’s leading index.

Large mining and oil and gas companies, for example, may benefit from a weaker dollar as commodities are priced in the US currency. Effectively a weak dollar makes the products sold by resources companies cheaper for potential customers around the world.

Oil major Royal Dutch Shell (RDSB) is up 3.5% since the start of the year to £25.61 whereas Anglo American (AAL) has gained 9.7% since the start of the year. This has coincided with a 2% decline in the value of the dollar against other major currencies this year following a 10% decline in 2017.

Gold has reached a four-month high as the currency it is priced in declines.

However, commodities aside, companies with significant US exposure which report in sterling could see any benefit from US tax reforms undermined by the lower relative value of their stateside earnings. (DS)

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