Pound’s postelection high drags Footsie

Market report Emma Newlands

The pound reached its highest level against the US dollar since last week’s general election, as weaker American inflation and retail sales data weighed on the greenback.

Sterling shot up 0.4 per cent versus the US dollar to reach $1.280 for the first time since 8 June, but fell 0.16 per cent versus the euro to trade at €1.135. Sterling’s ascent against the greenback weighed on listed multinationals on the FTSE 100, and London’s blue-chip index closed down 26.04 points at 7,474.4.

New US data showed inflation contracting by 0.1 per cent in May, while month-on-month retail sales fell by 0.3 per cent. Investors were also awaiting an interest-rate decision from the US Federal Reserve.

In oil markets, Brent crude prices tumbled 2.8 per cent to $46.88 per barrel as Energy Information Administration data pointed to largerthan-expected US gas and crude inventories and forecast that energy supplies from nonopec members would outstrip demand next year. Commodity stocks suffered, with Anglo American falling 28.5p to 1,059p, for example.

Whsmith shares jumped 47p to 1,791p as the retailer reported an 8 per cent rise in total sales in the 15 weeks to 10 June, while Gemfields shares surged 5.25p to 40.75p after Chinese conglomerate Fosun tabled a £220 million takeover offer for the Faberge owner.

The biggest risers on the FTSE 100 included Barratt Developments, up 18.5p to 594p, Centrica, up 5.9p to 202.9p, and Old Mutual, up 5.5p to 204.7p. The biggest fallers included Glencore, down 7.65p to 286.65p, Rio Tinto, down 75p to 3,142.5p, and BP, down 8.55p to 461.6p. Shares in the housebuilder jumped after it reported a 13 per cent rise in reservation rates in the four months to June despite election jitters. Shares in the luxury firm fell as experts said investors were disappointed by weak like-forlike sales in the new financial year.