A further weakening of sterling helped push the FTSE 100 to a record high during trading on Tuesday.

The country's premier share index climbed above 7,123 points just after midday - beating its previous highest level recorded in April last year and going as high as 7,129 before slipping back.

It finished the day at 7,070, just shy of its highest recorded market close level of 7,103.

Shares in the firms that make up the index have soared this month in pound terms as the currency has sagged to fresh 31-year lows.

Stock markets 'only place for investors to make an income'

The FTSE 100 consists largely of export-dominated multi-nationals which make the bulk of their sales in dollars - making the stocks of such firms more attractive when those sales are converted back to pounds.

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However, on dollar terms, the FTSE's market value remains well below its referendum result level - down more than 6%.

The new record for the FTSE was marked as sterling slid back below $1.23 - with more bloodshed for the currency seen likely in the wake of the so-called 'flash crash' last Friday amid a market frenzy over the UK's vote to leave the EU.

FTSE soars as pound plunges - why?

Neil Wilson, market analyst at ETX Capital, said: "The index jumped as the pound took another leg lower on mounting concerns about what a 'hard Brexit' will look like.

"Leaked Treasury documents argue that the cost Brexit could be £66bn per year, due to a slump in GDP of up to 9.5% compared with staying in the EU."

The FTSE 250, which has benefited from evidence the UK will avoid recession more than currency weakness, is also hovering near record highs.

Analysts have said the collapse in sterling has made UK firms more attractive for potential overseas buyers.</s>The pound fought back after a torrid week, amid relief over Prime Minister Theresa May’s plans to allow a Commons vote on her Brexit strategy.

Sterling bounced back against most major currencies, up a cent to $1.22 and a cent higher at €1.11, having been hammered in recent sessions on Brexit fears and suffering a dramatic hit in last Friday’s flash crash.

The relief rally comes as the UK government looks set to back a Labour call for parliament to be able to “properly scrutinise” May’s Brexit plans before the formal EU exit process begins.

READ MORE: FTSE 100 hits record high as pound continues to fall

Kathleen Brooks, research director at City Index, said: “If parliament can debate the plans, then the Prime Minister may have to soften her approach to negotiations, which could remove some of the market fears about the negative economic impact of Brexit.”

But City experts warned there may still be further falls for the battered pound.

Neil Wilson, markets analyst at ETX Capital, said: “This relief rally looks like a dead cat bounce. It could just be a short pause before sterling takes another leg lower towards $1.20.”

In equity markets, the FTSE 100 Index slipped back after hitting a new intraday record of 7,129.83 yesterday.

The top tier’s performance is closely linked to the pound, with sterling’s gains sending it lower as many of the firms listed on the FTSE 100 make their earnings overseas and benefit from a weak pound.

The London market was also dragged lower after Wall Street closed down 1 per cent overnight and following equity falls across Asia.

Brooks said the pound was set to remain under pressure, with Brexit negotiations just one of many factors pushing sterling lower.

She added: “There are many barriers to a pound recovery, including low interest rates from the Bank of England and strength in other currencies, such as the yen and the US dollar, where interest rates could rise in December.”

Click here to ‘Like’ The Scotsman Business on Facebook</s>LONDON (AP) — Britain’s top stock market index, the FTSE 100, struck a record high on Tuesday amid hopes that many of its constituent companies will benefit from the pound’s slide in currency markets.

While the pound has tanked following the June vote to leave the European Union, most of the FTSE 100 stocks have surged. That inverse relationship was evident again on Tuesday: as the pound fell another 0.9 percent to $1.2250, the FTSE 100 rose 0.5 percent to its new peak of 7,129.83.

At first glance, the stock gains may appear perverse — after all, the fall in the value of the pound indicates that investors are less hopeful about the outlook for the British economy in light of the Brexit vote and the government’s apparent desire to break away from the EU’s single market.

But the drop in the pound, while a drag on consumers’ and businesses’ spending abroad, is potentially good for British firms that already have big business interests outside the U.K. And the money they make abroad will be worth more when it is brought back to the U.K.

There are many such international companies in the FTSE 100, from oil giants like BP and Shell to educational publishers like Pearson and fashion houses such as Burberry.

As the pound drops — it’s fallen around 20 percent since the June 23 vote to leave the European Union — exporters have seen their goods become more cost competitive in international marketplaces.

“Brexiters might point to the FTSE’s rise as a sign of strength but this is very much a story of (pound) weakness boosting foreign earnings, which account for around two-thirds to three-quarters of FTSE 100 company revenues,” said Neil Wilson, markets analyst at ETX Capital.

While the pound’s slide against the dollar has captured most of the headlines, especially last Friday when it plunged about 6 percent at one point to a new 31-year low of $1.1789, the currency is posting equally dramatic declines against the euro, which is used by 19 EU countries. One euro is now worth 0.90 pounds compared with around 0.76 pounds just prior to it becoming clear that Britain had voted for Brexit.

The irony of the pound’s dramatic fall is that it will help British businesses secure market share in the EU’s single market, of which Britain is still a member until at least 2019, by making their goods more competitive.

Having suffered an immediate slide in the wake of the Brexit vote, the pound settled for much of the rest of the summer. But that changed at the start of this month when the government of new Prime Minister Theresa May started to lay out its vision for Brexit.

May, who replaced David Cameron in July, said she will invoke by the end of March the Article 50 of the EU treaty, the move that will officially start two years of talks on Britain’s exit. She also signaled that her government would prioritize controls on immigration over access to the EU market that is so valuable to many British companies.

A report in The Times newspaper on Tuesday, citing leaked papers from the Treasury department, said a so-called “hard Brexit” could lead to government tax revenues collapsing by 66 billion pounds ($81 billion) a year and that the country’s GDP could be 9.5 percent smaller if Britain leaves the single market and operates under standard World Trade Organization rules.

The report helped put further pressure on the pound. Add the uncertainty related to the Brexit negotiations and the Bank of England’s policies, which could see interest rates cut further, and the outlook remains bleak for the pound.

If not necessarily for stock portfolios.</s>The pound endured another day of pressure from investors on Tuesday after continued jitters on the foreign exchange markets pushed it down more than two cents to $1.21. 



Sterling recorded its worst four-day performance since the Brexit vote as a Bank of England official said he expected the pound to fall further in the coming weeks, driven by the referendum result and the UK’s trade deficit with the rest of the world.

The exchange rate with the US dollar stood at $1.30 last week when Theresa May opened the Conservative party conference and appeared to put regaining control of immigration above staying inside the EU’s single market free trade area. Investors took fright at the prospect of a hard Brexit and the currency has declined more than 6% against the dollar since then.

A flash crash last Thursday, when the pound fell by 6% in 10 minutes, heightened concerns that investors had lost faith in sterling as a major currency. A year ago a pound bought $1.55.



However, the pound’s decline had the opposite effect on the UK’s leading share index. The FTSE 100 touched a new intra-day record of 7,129.83 during afternoon trading, although it closed nearly 60 points lower after a late bout of selling, below the record closing figure of 7,104 reached last year. The driving force for the UK market’s recent surge has been the rapid decline in the pound, which has boosted the value of companies that earn much of their revenues in dollars.

Michael Saunders, a former investment banker who joined the monetary policy committee (MPC) in August, said Britain’s large current account deficit was adding to the anxiety about the ability of the nation to pay its way once it quits the European Union.

Saunders said the current account, which measures the balance of trade, cash transfers and investment income with other countries, was already undermining confidence in the UK’s ability to pay its way before the EU referendum.

Speaking to MPs on the treasury select committee, Saunders warned it was now a major issue and compounding the already weak sentiment on currency markets towards sterling.

“Given the scale and persistence of the UK’s current account deficit, I would not be surprised if sterling falls further, but I am fairly agnostic as to whether any further depreciation is likely,” Saunders told MPs on the treasury select committee.



Saunders, who joined the MPC from the US investment bank Citi, where he was chief economist, said investors were weighing up the implications of Britain leaving the EU.



“The work done by the International Monetary Fund and the OECD suggests that the long-run effects of the UK’s exit from the EU is that growth will be lower. If all we are doing is adjusting to a new equilibrium, that is not a concern,” he said.

Only if the pound plummets or triggers falls in other markets would the Bank of England need to consider cutting rates to bolster confidence and growth, he added.

“If such a scenario were to materialise then, provided inflation expectations and pay growth remain well contained, I would expect the MPC to largely look through any such direct effects on inflation of sterling weakness, even if they extend for several years.”

But the lower pound, which reduces the cost of UK goods and services sold abroad, could boost exports and offset much of the anxiety caused by the Brexit vote.

A fall in imports would also help to reduce the current account deficit, he said, adding that the government could take advantage of the current depressed situation to boost growth with extra spending.

Several Tory MPs, including supporters of the leave campaign, have warned that leaving the single market will harm the economy and have demanded ministers make every effort to negotiate continued access.



But the hardline taken by Downing Street and an equally robust response from European leaders, who have emphasised the free movement of labour as a pillar of the single market, have heightened concerns in the City that Britain will eventually leave all the EU’s major institutions.

Kathleen Brooks, research director at financial betting firm City Index and Forex.com, says traders fear the UK could be dragged back by Brexit uncertainty.

She told BBC News that: “The weakness in the pound is really a sign that investors don’t have confidence in a post-Brexit UK economic outlook. They think Brexit is going to be very negative for the UK economy, and UK GDP could contract going forward.”</s>Travellers are now receiving less than one euro to the pound at several UK airports, a study has found.

The BBC reports that the average rate is now 99 euro cents to the pound.

Glasgow Prestwick is said to offer the best rate currently - offering €1.06 for a pound.

It comes as the value of the pound falls sharply since the Brexit vote.

The survey of airport bureau de change currency rates was carried out by travel money firm FairFX on Monday morning.

The firm’s chief executive, Ian Strafford-Taylor, told the BBC: “Currency firms operating in airports are known to offer the worst exchange rates down to taking big profit margins and today are shockingly offering holidaymakers below one euro to the pound.

“Unfortunately, if the pound falls even further, rates as poor as this could be seen at airport providers up and down the country - taking advantage of their captive audience of holidaymakers and business travellers.”</s>The pound has continued to fall against the US dollar as worries persist over the UK’s economic prospects outside the EU.

Sterling suffered sharp losses last week as ministers at the Conservative party conference signalled they would opt for a “hard Brexit” settlement that sacrifices access to the single market and prioritises stricter immigration controls.

Sterling was under pressure again at the beginning of this week but some calm had returned to markets. The pound fell 0.3% against the US dollar to $1.2395 on Monday. It was flat against the euro at €1.11.

However, the pound’s weakness boosted the UK’s FTSE 100 share index – which features companies that make a significant proportion of their profits in dollars – as it closed at 7,097.5, near its record closing high of 7,104 last year.

Investor nerves were strained on Friday when the pound slumped more than 8% in a “flash crash” in thin overnight trading in Asia. It dropped from $1.26 to $1.1491 in just eight minutes – a huge plunge in a market where a single cent is a big change – and recovered only some of those losses during London trading hours. Sterling still ended the week about 4% lower against the euro and US dollar.

One market watcher said the currency was stabilising after the events of Friday morning. “The dust has started to settle after the flash crash overnight on Thursday saw the pound briefly trade below €1.10 and $1.20,” said Chris Saint, senior analyst at City firm Hargreaves Lansdown’s currency service.

With a quiet week ahead on the economic indicator front, he expected the pound to continue to take its cues from politics. “There is little on the domestic calendar this week to draw attentions away from ongoing worries over how politicians will handle Britain’s withdrawal from the EU, although Friday’s construction output data will garner some interest,” said Saint.

The pound’s sharp fall has raised pressure on those UK firms that rely on imports, such as retailers and those manufacturers who need raw materials like plastics and metals. A weaker currency makes imports more expensive. On the other hand, it makes UK exports more competitive and some companies have reported a pick-up in overseas sales since the British vote to leave the EU in June knocked sterling.

For consumers, the weak pound makes overseas holidays more expensive. There are also worries that sterling’s fall will be felt at the tills as retailers pass on their higher costs. The British Retail Consortium warned on Monday that a failure to get a good trade deal would push prices up further still as shops adjust to higher trade tariffs.

Currency experts expect the pound to remain under pressure against the dollar on continued fears about the UK economic outlook. Another key factor keeping the pound low against the dollar is the prospect of US interest rates being raised while the Bank of England has hinted that with economic growth weak interest rates in the UK have further to fall from their already record low of 0.25%.

The dollar and US stocks were also boosted on Monday by a market view that Hillary Clinton had won the latest US presidential debate against Donald Trump.

Jasper Lawler, analyst at online trading company CMC Markets, said the “fascinating presidential debate left markets’ favourite Hillary Clinton with a firm lead in the polls. Donald Trump was more measured in the debate but the damage had already been done after his ‘lewd comments’ video was leaked two days earlier.”</s>The FTSE 100 has hit a record high as the pound tumbled further on Brexit jitters.

The UK’s top-flight index reached 7,129.83 points in mid-session trading – beating its previous record intraday high of 7,122.74, set in April 2015.

Shares have been surging higher while sterling has taken a battering since the Brexit vote, as many of the listed multinational companies benefit from earnings in stronger foreign currencies.

Against the US dollar, sterling dropped more than 0.8 per cent to trade as low as $1.225 today. The pound also fell against the euro, down about 0.3 per cent to €1.106.

READ MORE: Pound falls to fresh 31-year low in ‘flash crash’

Since the Brexit vote on 23 June, the FTSE 100 has made a healthy recovery, jumping about 12.5 per cent, while sterling has slumped more than 18 per cent against the US dollar over the same period.

Sterling ducked even lower today after leaked government papers laid bare the cost of leaving the EU. Switching to World Trade Organisation rules would cause gross domestic product to fall by up to 9.5 per cent and cost the Treasury up to £66 billion a year, compared with if the country remained in the EU.

Connor Campbell, a financial analyst at SpreadEx, said the news has “thrown more fuel on the fearful fire…leaving the markets to deal with another day of sterling dread”.

He added: “With that in mind, the pound, of course, has woken up wheezing and spluttering, continuing to shed an amount of blood that is apt for a month ending with Halloween.”

Click here to ‘Like’ The Scotsman Business on Facebook</s>By any measure, the pound is having a bad time.

According to a trade-weighted index measuring sterling against a basket of its trading peers, the pound has now slumped to its lowest on record, stretching beyond the introduction of free-floating exchange rates in the 1970s and all the way back to the mid-1800s, according to data compiled by the Bank of England.

The pound’s effective exchange rate, which is weighted to reflect the UK’s trade flows, hit a low of 73.38 on Tuesday – weaker than the depths hit during the financial crisis, Britain’s ejection from the European Rate Mechanism in 1992, and its decision to leave the Gold Standard in the 1930s.

The effective exchange rate has broken fresh ground as the pound has fallen to new 31-year lows against the dollar on the back of Brexit jitters. It slumped as low as $1.2117 in late US trading on Tuesday.

According to the Bank of England’s current formula for the trade weighted index – last rejigged back in 2006 – the biggest contributing weights to the basket are Germany (22.5 per cent), US (16.5 per cent), France (12.6 per cent), Italy (8.3 per cent) and Japan (7 per cent ).

Sterling regained some poise on Wednesday after prime minister Theresa May said she would to hold a parliamentary debate on the UK’s exit proceedings, denting expectations of a “hard Brexit”.</s>BRUSSELS (dpa-AFX) - The pound erased its early losses against its major counterparts and drifted higher in pre-European trading on Wednesday, as investor concerns over a 'hard Brexit' eased after the U.K. Prime Minister Theresa May has allowed the call to let the U.K. Parliament to decide on the Brexit strategy.



Bloomberg reported that May has accepted the motion from the opposition Labour Party calling for a 'full and transparent debate on the government's plan for leaving the EU.'



The U.K. Parliament will debate a motion that enable the MPs to 'properly scrutinise that plan' before triggering Article 50, the formal mechanism of withdrawing from the European Union.



Late Tuesday, May approved an amendment that effectively accepted the motion, while suggesting that the government will reject any attempt to block Brexit or 'undermine the negotiating position of the government'.



The currency declined on Tuesday as a media report showed that the British government could lose as much as GBP 66 billion per year in tax revenues and see its GDP slashed by up to 9.5 percent due to impact of a 'hard Brexit.' It declined 1.3 percent against the Swiss franc, 2.05 percent against the yen, 1.9 percent against the greenback and 1.19 percent against the euro for the day.



Reversing from an early low of 1.2105 against the greenback, the pound advanced to 1.2325 and held steady thereafter. The pound is likely to find upside target around the 1.28 mark.



The pound, having fallen to 125.30 against the yen at 5:30 pm ET, reversed direction and climbed to 127.56. The next possible upside target for the pound is seen around the 132.00 zone.



Bank of Japan policymaker Yutaka Harada said that negative interest rate policy is unlikely to hurt banks' business conditions and deteriorate the economy, and the central bank should take additional easing measures when needed without hesitation. 



'It is unlikely that in the current situation the negative interest rate policy would affect financial institutions' business conditions and deteriorate the economy as a whole,' Harada said in a speech to business leaders in Nagano.



The pound advanced to a 5-day high of 0.8967 against the euro and a 2-day high of 1.2180 against the Swiss franc, off its lows of 0.9127 and 1.1966, respectively hit at 5:30 pm ET. Continuation of the pound's uptrend may see it finding resistance around 0.87 against the euro and 1.26 against the franc.



Looking ahead, Switzerland's ZEW survey for October and Eurozone industrial production for August are due shortly.



Federal Reserve Bank of New York President William Dudley speaks at the Fireside Chat with the Business Council of New York in Albany at 8:00 am ET.



Kanas City Fed President Esther George will speak at the Federal Reserve Bank of Chicago's Annual Payments Symposium at 9:40 am ET.



At 2:00 pm ET, the Federal Reserve releases minutes of September policy meeting.



Copyright RTT News/dpa-AFX</s>BRUSSELS (dpa-AFX) - The pound fell back against its major counterparts in early New York trading on Wednesday, after Brexit minister David Davis said that the U.K. government cannot provide the details on top priorities for Brexit negotiation, as it would make that top priority more costlier.



'If you tell your negotiator - you opposite number in negotiation - exactly what your priorities are, exactly what your top priority is, then it will make that top priority extremely expensive,' Davis told parliament.



'If you make pre-emptive indications that you are willing to make a concession on something, you actually reduce the value of that concession. So in many, many ways we cannot give details about how we are going to run the negotiation.'



The pound eased back to 1.2166 against the greenback, from a high of 1.2325 hit at 11:00 pm ET.



Pulling away from an early 2-day high of 1.2180 against the Swiss franc, the pound edged down to 1.2045.



The pound retreated to 126.47 against the yen and 0.9055 against the euro, from its early high of 127.56 and a 5-day high of 0.8967,respectively.



The next possible downside target for the pound may be found around 122.5 against the yen, 1.19 against the greenback, 1.16 against the franc and 0.92 against the euro.



Copyright RTT News/dpa-AFX
Following the Brexit vote and the subsequent drop in the exchange rate of the British pound to U.S. dollar, the FTSE 100 Index reaches an all-time intra-day high of 7,129.