New Year rally wanes for FTSE 100 while pound gains ground
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London’s FTSE 100 has struggled to hold on to gains in a choppy day of trading for global markets, while the pound strengthened after dropping to an eight-month low against the dollar. The FTSE 100 had surged by more than 1% on Thursday, the first trading day of 2025, fuelling hopes that it was kicking off a stronger year of trading.
But it failed to keep up the momentum on Friday, dropping 36.11 points, or 0.44%, to close at 8,223.98. Gains for energy giants Shell and BP were offset by losses for housebuilders and some retail stocks. Next week, some of Britain’s biggest retailers including Tesco and Sainsbury’s are set to reveal their sales performance for the critical Christmas period.
Given the strength of the US economy, the Federal Reserve looks set to be more reticent about cutting rates than the Bank of England. Investors will be hoping for good news after new data from the British Retail Consortium showed shopper numbers fell over December for the second year in a row, with high streets and shopping centres hit particularly hard.
Footfall dropped 2.2% compared with the same month in 2023. Meanwhile, the pound strengthened against the US dollar after hitting an eight-month low on Thursday, and moving close to falling to the lowest level in more than a year. On Friday, sterling was up about 0.2% against the dollar, at 1.241. Sterling was more or less flat against the euro, at 1.206.
