Rate hike hint boosts sterling but hits FTSE

Sterling has leapt to its highest level since the EU referendum result after a Bank of England policymaker hinted that he may back an interest rate rise.

The pound continued its remarkable rally from Thursday’s session, pushing 1.4% higher to 1.358 versus the US dollar to clock levels not seen since June 24 last year.

Sterling also climbed 0.9% against the euro to 1.135.

However, the strength of the UK currency heaped more misery on blue-chip stocks, with the FTSE 100 Index dropping to its lowest level since April, before closing down 79.92 points to 7,215.47.

Multinational blue-chip stocks suffer when the pound rises because their overseas earnings are hit by a less favourable currency translation.

It comes after one of the Bank’s most dovish policy-makers Gertjan Vlieghe, said he may back a hike “as early as in the coming months”.

The biggest risers on the FTSE 100 Index were Imperial Brands up 67p to 3,327.5p, ITV up 2.2p to 158.2p, British American Tobacco up 48.5p to 4,741p and Next up 51p to 5,045p.

The biggest fallers were Carnival down 317p to 4,783p, Provident Financial down 35.5p to 794p, Ferguson down 152p to 4,486p and Pearson down 18p to 568.5p.

ITV saw its share price rise 2.2p to close at 158.2p.