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FTSE flounders as pound hits new high

London Stock ExchangeA rise in the pound against the dollar left the FTSE 100 floundering and it closed almost 80 points lower – a fall of 1.1% – at 7,215.47 points.

Sterling shot to its highest level since the Brexit vote after hawkish comments from Bank of England policymaker Gertjan Vlieghe reinforced expectations for a rate hike.

Speaking in London as part of the Society of Business Economists’ annual conference, Mr Vlieghe said: “There remains a risk that, at some stage, the uncertainty surrounding the Brexit process has a larger impact on the economy than we have seen so far. If that happens, monetary policy would respond appropriately.

“But for now, it seems the net effect of the many underlying forces acting on the UK economy is that slack is continually being eroded and wage pressure is gently building.

“If these data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth continue, the appropriate time for a rise in Bank Rate might be as early as in the coming months.”

In response the pound rose 1.04% versus the euro to 1.1359 and 1.4% against the dollar to 1.3585.

Cruise operator Carnival shed 6.2%, while Pearson fell 3.7%. Oil services company Petrofac closed 1.18% lower despite RBC Capital Markets raising its stance on the firm to ‘sector perform’ from ‘underperform’.

On the FTSE 250 pub operator JD Wetherspoon bucked the trend, jumping 13.9% to a record high after reporting a near-28% leap in profit. Aggreko was the biggest faller, down 4.17%.

 

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