THE pound’s rally picked up pace on Thursday, notching up a fresh post-Brexit vote high as the US dollar continued to struggle across the Atlantic.
Sterling hit as high as 1.43 against the greenback, before trading up 0.2 per cent to 1.427 when the London market closed. The pound was trading around the 1.50 dollar mark before the Brexit vote.
But the UK currency faced a tougher session versus the euro, trading 0.4 per cent lower at 1.142 despite the European Central Bank keeping its monetary policy stance unchanged.
The FTSE 100 Index closed down 27.59 points at 7615.84, as the pound’s strength put pressure on blue-chip stocks.
A rise in sterling’s value can cause investors to pull out of multi-national stocks because their overseas earnings suffer from a less favourable currency translation.
Chancellor Philip Hammond said sterling’s resurgence had put the UK currency in a “sweet spot” by helping to alleviate the pain on consumers of Britain’s soaring inflation and paltry wage growth.
Speaking to Bloomberg Television in Davos, Mr Hammond said: “Yes, there’s a sweet spot. Actually, over the last few days, we have seen the pound appreciate against the dollar quite rapidly, but it’s pretty stable against the euro.
“So, we are very happy with where the currency is at the moment.”
On European markets, Germany’s Dax was 0.9 per cent lower and the Cac 40 in France fell by 0.3 per cent.
The price of oil pushed to its highest level since December 2014, supported by a weaker American dollar, falling US crude inventories and Opec-led supply cuts.
Brent crude climbed as high as $71.26 a barrel, before paring gains to climb 0.3 per cent to $70.92.
In UK stocks, broadcaster Sky lifted more than one per cent after it posted a leap in half-year earnings as it added new customers and benefited from a hike in demand for pay-as-you-go products.
The group reported a 10 per cent rise in underlying earnings to £1.1 billion for the six months to the end of December as it added 365,000 new customers and sold 20 million pay-as-you-go products, such as one-off films and sporting events.
The figures come days after Britain’s competition watchdog provisionally blocked 21st Century Fox’s £11.7 billion bid to take full control of Sky. Shares were up 12.5p to 1,036p.
On the second tier, construction group Kier surged 15 per cent after it offered reassurance over trading in the wake of Carillion’s collapse.
Kier has suffered hefty stock market swings since rival and joint venture partner Carillion’s shock demise.
However, shares bounced back after it confirmed that trading is in line with expectations and it remains on track for double-digit annual profit growth.
The group was up 146.5p to 1,104p, after telling the market that contracts taken over from Carillion are “performing well, operationally and financially”.
Hornby endured a rough ride on the London Stock Exchange’s junior market as shares plummeted on warnings that poor Christmas trading will contribute to bigger-than-expected full-year losses.
The troubled toymaker was down 10.5 per cent, or 2.5p to 21.2p, as fewer discounts and late stock deliveries caused festive sales to come in “below management expectations”.
On a brighter note, the firm said it has made significant progress on a cost-cutting drive, reducing fixed overheads by £1.7 million.
The biggest risers on the FTSE 100 Index were Smith & Nephew up 51.5p to 1,293.5p, Bunzl up 68p to 2,009p, Next up 152p to 5,064p, Associated British Foods up 77p to 2,861p.
The biggest fallers were Sage Group down 17.6p to 750.6p, British American Tobacco down 106p to 4,870p, Rolls-Royce Holdings down 17.6p to 844p, Imperial Brands down 56p to 2,864p.
Source : HeraldScotland