Pound strikes 15-month high despite dip in UK GDP

The FTSE 100 moved 0.32%, or 24.1 points, higher to finish at 7,440.21.

The pound has lifted to a new 15-month high against the dollar (Dominic Lipinski/PA) (PA Archive)

The pound has lifted to a fresh 15-month high against the dollar despite fresh figures revealing the UK economy shrank in May.

Sterling rose for the sixth session in a row as trader increased bets that the US Federal reserve will soon start cutting rates due to softer inflation while UK rate expectations remain high.

On Thursday, the FTSE 100 performed behind its European peers as the pound dragged on London-listed multinationals.

However, the index still closed in the green as it was boosted by a strong performance among commodity stocks.

The pound was up 0.8% to 1.309 US dollars and increased 0.27% to 1.169 euros at market close in London.

The FTSE 100 moved 0.32%, or 24.1 points, higher to finish at 7,440.21.

Michael Hewson, chief market analyst at CMC markets UK, said: “Despite another set of poor Chinese economic numbers European markets have seen another positive session.

“This all-round weakness could force the hand on whether we see further stimulus measures from Chinese authorities in the coming weeks, which in turn may be helping to underpin today’s resilience, with the DAX and CAC 40 outperforming, while the FTSE 100 has lagged.

“The pound has shrugged off today’s disappointing economic numbers for May, while the economy didn’t contract as much as feared we also saw contractions in manufacturing and industrial production of 0.2% and 0.6% respectively.”

Germany’s Dax index was 0.74% higher for the day while the Cac 40 closed up 0.5%.

Stateside, the main US markets opened higher amid strong earnings from Pepsico and Delta.

In company news, housebuilder Barratt drifted lower after it warned of a slump in house builds as it said cost-of-living pressures and rising mortgage rates were impacting homebuyer demand.

The FTSE 100 firm forecast that its build completions to tumble by as much as 23% over 2023-24, to between 13,250 and 14,250 in 2023-24.

The news dampened investor sentiment further, with Barratt shares closing 6.8p lower at 411.2p as a result.

Domino’s Pizza was higher after the takeaway group ended its search for a permanent chief executive by revealing Andrew Rennie will take over at the helm next month.

Mr Rennie will start in the post on August 7, having previously acted as the European boss for Sydney-listed Domino’s Pizza Enterprises, replacing interim boss Elias Diaz Sese.

Shares finished the day up 13.6p at 306.2p on Thursday.

Watches of Switzerland shrugged off wider pressure on the retail sector as it revealed demand for luxury watches outpaced supply over the past year.

The retailer said group revenues grew by nearly a fifth to £1.5 billion in the year to the end of April.

Shares in the business finished 69p higher at 710.5p.

Elsewhere, the price of a barrel of Brent crude oil rose by 0.54% to 80.54 US dollars at the time markets were closing in London.

The biggest risers in the FTSE 100 were Convatec, up 5.8p at 207.2p, Glencore, up 11.3p at 469.65p, Entain, up 28p at 1,278p, Antofagasta, up 31.5p at 1,547p, and Prudential, up 21p at 1,080.5p.

The biggest fallers of the session were British American Tobacco, down 68p at 2,523p, Barratt Developments, down 6.8p at 411.2p, Bunzl, down 33p at 2,783p, B&M European Value, down 6.4p at 545.6p, and Berkeley Group, down 41p at 3,998p.