Pound’s gains push blue-chip index into red

Market report Emma Newlands

The pound shrugged off the Bank of England’s warnings of weaker economic growth, making gains on the US dollar and the euro as talks with the EU resumed.

The UK’S central bank said Brexit uncertainty is set to see growth slump to its lowest level for ten years in 2019, as it held interest rates at 0.75 per cent.

Governor Mark Carney also warned about the mounting risk of recession in the event of a no-deal Brexit.

Sterling initially lost ground following the news, but had recovered by the end of the day to gain 0.43 per cent on the euro at €1.424.

The currency was 0.38 per cent higher versus the US dollar at $1.297.

Fiona Cincotta, senior market analyst at City Index, said the pound was boosted by Carney’s “upbeat tone”, as he indicated growth could be higher in the case of an orderly Brexit.

“Whilst the central bank governor offered some pound-pleasing views, until Brexit “fog” clears we are not going to have a clear idea on the future path of interest rates,” she said.

The stronger pound was partly to blame for pushing London’s blue-chip index into the red.

The FTSE 100 fell 79.51 points of 1.1 per cent to close at 7,093.58.

Ocado continued its steep decline, shedding another 94.6p to close at 873.8p, following the fire at its facility in Hampshire.

Housebuilder Bellway’s shares dropped 93p to 2,797p, after saying uncertainty has “inevitably” taken its toll on consumer confidence.

But the company still expects to see half-year revenues rise by more than 12 per cent.