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The pound briefly slipped on Tuesday following a suicide bombing attack at an Ariana Grande concert at Manchester Arena, the most deadly attack in the UK in a decade.
Twenty-two people, including an eight-year-old girl, were among those killed.A total of 59 people were left injured in the blast.
Sterling slipped by about 0.2 per cent against the dollar to $1.2978 following the attack before recovering to trade at $1.3020 at markets closing time in London.
“The FTSE started the day effectively flat at 7500, with most of the early action centred on the pound,” Connor Campbell, financial analyst at Spreadex, said.
“Investors are assumedly shaken by the events in Manchester yesterday evening, combined with the continued effects of the Tories’ election wobble,” he added.
The attack is the worst in the UK since 56 people were killed in the 7 July London bombings in 2005. The police said it was carried out by one man who died at the scene after detonating an explosive device.
The impact on other areas of the market was limited.
"We could see a bout of nervousness regarding the terror threat, but it's likely to be minor," Shane Oliver, head of investment strategy at AMP Capital in Sydney, told Reuters.
"Ever since 9/11, the impact on markets from terrorist events has been declining," he added.
Investors are displaying caution ahead of the 8 June general election and as Brexit negotiations get under way.
Strategist at UniCredit wrote in a note on Monday that they still deem it too early to “turn sterling-bullish”.
Manchester explosion in picturesShow all 37 1 /37Manchester explosion in pictures Manchester explosion in pictures People running down stairs as they attempt to exit the Manchester Arena after a blast, where U.S. singer Ariana Grande had been performing, in Manchester
Twitter/@ZACH_BRUCE/ via REUTERS
Manchester explosion in pictures Helpers attend to people inside the Manchester Arena after a suspected suicide bomber detonated an explosive device at the end of an Ariana Grande concert, killing 22 people
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Manchester explosion in pictures Armed officers guard outside a hotel near the Manchester Arena following reports of an explosion, in Manchester, Britain
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Manchester explosion in pictures Police officers are seen outside the Manchester Arena, where U.S. singer Ariana Grande had been performing, in Manchester, northern England
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Manchester explosion in pictures
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Manchester explosion in pictures
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Manchester explosion in pictures
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Manchester explosion in pictures
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Manchester explosion in pictures Police and fans close to the Manchester Arena, after reports of an explosion
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Manchester explosion in pictures There have been reports of explosions at Manchester Arena where Ariana Grande had performed
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Manchester explosion in pictures Police deploy at scene of explosion in Manchester, England, at a concert in Manchester Arena
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Manchester explosion in pictures Police stand by a cordoned off street close to the Manchester Arena
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Manchester explosion in pictures Police deploy at scene of explosion in Manchester, England
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Manchester explosion in pictures Police deploy at scene of a reported explosion during a concert in Manchester, England, on May 23, 2017. British police said early May 23 there were "a number of confirmed fatalities" after reports of at least one explosion during a pop concert by US singer Ariana Grande. Ambulances were seen rushing to the Manchester Arena venue and police added in a statement that people should avoid the area
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Manchester explosion in pictures An ambulance drives away from the Manchester Arena, where U.S. singer Ariana Grande had been performing, in Manchester
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Manchester explosion in pictures Police escort members of the public from the Manchester Arena in Manchester, England.
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Manchester explosion in pictures A woman sits in the street in a blanket near the Manchester Arena as police guard the area following reports of an explosion, in Manchester, Britain
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Manchester explosion in pictures Two women wrapped in thermal blankets stand near the Manchester Arena, where US singer Ariana Grande had been performing, in Manchester
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Manchester explosion in pictures A Royal Logistic Corps (RLC) bomb disposal robot is unloaded outside the Manchester Arena following reports of an explosion, in Manchester. At least 19 people have been confirmed dead and others 50 were injured, authorities said. It is being treated as a terrorist incident until police know otherwise
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Manchester explosion in pictures A Royal Logistic Corps (RLC) bomb disposal robot is unloaded outside the Manchester Arena following reports of an explosion, in Manchester
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Manchester explosion in pictures Members of the public receive treatment from emergency service staff at Victoria Railway Station close to the Manchester Arena on May 23, 2017 in Manchester, England. There have been reports of explosions at Manchester Arena where Ariana Grande had performed this evening. Greater Manchester Police have have confirmed there are fatalities and warned people to stay away from the area
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Manchester explosion in pictures Armed police after a suspected terrorist attack at the Manchester Arena at the end of a concert by US star Ariana Grande left 19 dead
PA wire
Manchester explosion in pictures Emergency services arrive close to the Manchester Arena in Manchester
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Manchester explosion in pictures An amoured police vehicle patrols near Manchester Arena in Manchester
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Manchester explosion in pictures A man carries a young girl on his shoulders near Victoria station in Manchester
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Manchester explosion in pictures Police officers stand at the Miller Street and Corporation Street Crossroads, in front of the Manchester Arena in Manchester, England
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Manchester explosion in pictures Police block a road near to the Manchester Arena in central Manchester, England
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Manchester explosion in pictures Armed police patrol near Victoria station in Manchester, northwest England. Twenty two people have been killed and dozens injured after a suspected suicide bomber targeted fans leaving a concert of US singer Ariana Grande in Manchester
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Manchester explosion in pictures Police forensic officers leave the Manchester Arena as they investigate the scene of an explosion in Manchester
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Manchester explosion in pictures A forensic officer collects evidence on a walkway between Victoria station and Manchester Arena following a deadly terror attack in Manchester,
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Manchester explosion in pictures A woman and a young girl wearing a t-shirt of US singer Ariana Grande talks to police near Manchester Arena following a deadly terror attack in Manchester,
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Manchester explosion in pictures
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Manchester explosion in pictures Mayor of Greater Manchester Andy Burnham and Manchester City Council Leader Sir Richard Leese speak to the media outside Manchester Town Hall after a suicide bomber killed 22 people, including children, as an explosion tore through fans leaving a pop concert in Manchester
Dave Higgens/PA Wire
Manchester explosion in pictures The media gather behind a police cordon in Manchester
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Manchester explosion in pictures Flowers left close to the Manchester Arena, the morning after a suicide bomber killed 22 people, including children, as an explosion tore through fans leaving a pop concert in Manchester
Danny Lawson/PA Wire
Manchester explosion in pictures Ariana Grande concert attendees Karen Moore and her daughter Molly Steed, aged 14, from Derby, leave the Park Inn where they were given refuge after last night's explosion at Manchester Arena
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Manchester explosion in pictures Signs saying 'We love Manchester' are displayed in a window in Manchester, England
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They said that the recent move above $1.30 “largely reflects a weak dollar rather than renewed confidence in the [pound]”.
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