FTSE soars and pound slips as more interest rate cuts predicted
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Positivity around global equity markets helped propel the FTSE 100 to record levels, marking a week of progress for London’s financial markets. Nevertheless, the strong showing from the FTSE was closely linked to another stumble in the value of the pound.
It came after a surprise slump in UK retail sales in December increased expectations for more interest rate cuts this year. The prospect of lower borrowing costs supported stocks in London, providing a particular boost to the housing and mining sectors.
The FTSE 100 finished 113.32 points, or 1.35%, higher to end the day at 8,505.22. It reached an all-time peak of 8,533.43 during the session. Sterling meanwhile continued its recent torrid spell, sliding to a new 14-month low due to the prospect of lower interest rates.
The pound was down 0.47% at 1.217 US dollars and down 0.33% at 1.184 euros when London’s markets closed. Joshua Mahoney, chief market analyst at Scope Markets, said: “The FTSE 100 has pushed sharply higher as a fresh bout of weak economic data poured cold water on the notion that the Bank of England would have to take a patient approach in the face of burgeoning inflation pressures.
“Meanwhile, the ongoing weakness of the pound provides an additional tailwind for international-focused UK listings.”. Elsewhere in Europe, the other main markets also rallied amid broader positive sentiment about possible rate cutting. The Cac 40 ended 1.03% higher for the day and the Dax index was up 1.17%.
