Pound tumbles to worst in a year after talk of ‘aggressive’ rate cuts
The pound was down 1.13% at 1.312 US dollars and down 0.82% at 1.190 euros
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Your support makes all the difference.The pound slumped to its worst single-day performance for more than a year on Thursday after the governor of the Bank of England signalled “more aggressive” rate cuts could be on the way.
Andrew Bailey said that if inflation remains in check the Bank might be able to be “more activist” over reducing borrowing costs, in an interview with The Guardian.
This led a number of economists to predict rate cuts, while there was also downward pressure on the pound from weaker-than-expected activity in the UK services sector.
The pound was down 1.13% at 1.312 US dollars and down 0.82% at 1.190 euros.
Kathleen Brooks, research director at XTB, said: “The market has used Bailey’s comments as a green light to price in more monetary loosening.
“Pound versus the dollar had already sold off sharply this week, so further downside could be limited in the short term, however, Bailey has made it harder for the pound to recover.”
London’s equity markets finished slightly lower despite benefitting from stronger Shell and BP shares due to higher oil prices.
The FTSE 100 finished 8.34 points, or 0.1%, lower to end the day at 8,282.52.
Elsewhere in Europe, the Cac 40 ended 1.32% lower for the day and the Dax index was down 0.78%.
Stateside, the main markets were a touch lower as most technology firms had a weak start to trading.
The price of oil lifted to its highest in over a month as traders took their cues from increased instability in the Middle East, offsetting potential gains from an improved global supply outlook.
A barrel of Brent crude oil was up by 3.9% to 76.83 dollars as markets were closing in London.
In company news, Tesco finished higher after the UK’s largest supermarket group told shareholders that its full-year profit is set be slightly higher than previous guidance on the back of stronger sales.
The retailer said consumers are in “reasonably good shape” as a surge in demand for premium products and food price cuts helped lift sales 4% higher for the past half year.
Shares in Tesco were up 2.6% to 364p at the end of trading.
Construction firm Galliford Try climbed in value after it surpassed profit and sales guidance in a delayed annual results update.
The Uxbridge-based company said it is “confident” in its future outlook as it pointed towards a “strong pipeline” of new opportunities across its sectors.
Shares in the firm moved 8.3% higher to 325p as a result.
SSP Group was in the red at the close as weaker-than-expected trading in continental Europe took the shine off a rise in group sales.
The Upper Crust and Caffe Ritazza owner reported 6% sales growth for the latest quarter, but saw growth of 3% in continental Europe as French sales were “negatively impacted” by the Paris Olympics.
SSP shares were down 0.8% at 155.9p.
The biggest risers on the FTSE 100 were Rolls-Royce, up 14.6p to 533.4p, Tesco, up 9.1p to 364p, Shell, up 43p to 2,564p, Scottish Mortgage Investment Trust, up 14p to 856p, and JD Sports, up 2.1p to 142.45p.
The biggest fallers were Phoenix Group, down 32p to 523.5p, Diploma, down 226p to 4,208p, M&G, down 5.2p to 202.4p, Hargreaves Lansdown, down 27p to 1,085p, and Prudential, down 17.2p to 703.2p.