Pound tumbles to 14-month low as FTSE climbs despite slump from retail stocks
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The pound slid to its lowest for more than a year on Thursday, helping to push the FTSE 100 firmly higher. Sterling continued its recent slump amid worries over UK borrowing costs, with the yield on 10-year government bonds dropping to its lowest level since the 2008 financial crisis.
However, yields settled in the afternoon session as Government ministers sought to reassure investors, stressing there was “no need for emergency intervention”. The pound dropped by as much as 1% but clawed back some ground during the day. The pound was down 0.58% at 1.229 US dollars and down 0.34% at 1.193 euros when London’s markets closed.
This helped to support London’s multinationals on the FTSE 100, helping the index to a four-week-high despite a slump from retail stocks. Sentiment in the sector was impacted by Marks & Spencer, which cautioned over uncertainty in the face of rising costs despite positive growth over Christmas.
The FTSE 100 finished 68.66 points, or 0.83%, higher to end the day at 8,319.69. Chris Beauchamp, chief market analyst at IG, said: “The turmoil in gilts and sterling has understandably caught everyone’s attention, but the FTSE 100 has managed another strong day today.
“Sterling weakness has proven to be a boon once again, and the international nature of many of the index’s members mean there is little read-across from the doom-laden trading in UK-focused assets. “Leading the charge has been the mining sector thanks to a global rebound in commodity prices.”.
