Pound falls on inflation data as FTSE steadies
The news that inflation remained unchanged at 2.6% in July saw the pound fall to a five-week low, helping to boost blue-chips, which suffered in a sell-off last week prompted by tensions over North Korea.
Analysts now believe inflation may not hit the 3% peak in October which was forecast by the Bank of England. That should also keep interest rates on hold until next year.
Business also backed the government’s strategy for Brexit, including the proposal of a temporary customs union with the EU to act as a transitionary period for the benefit of businesses.
The newly merged asset manager Standard Life Aberdeen climbed again to be the top FTSE gainer, after a double upgrade from Barclays to overweight from underweight.
Housing and social care provider Mears was the biggest FTSE All-Share faller after it warned that full-year housing revenues would be £30m lower than previous forecasts.
The aftermath of the Grenfell Tower tragedy will have a significant impact on the group’s housing division as clients review the commissioning and safety practices at their properties.
This will inevitably affect the timing of the group’s planned workloads with clients’ attention diverted towards ensuring that their portfolios are safe and fully compliant. The group’s shares were down by more than 11.3% in early trading.