FTSE makes gains despite drag from rallying pound

The FTSE 100 closed higher despite losing steam at the end of the trading session in the face of a late rally in the price of the pound.

Western markets were given a lift at the start of the session by optimistic economic rebound predictions by the International Monetary Fund (IMF).

However, the London markets performed significantly behind their European counterparts as the IMF cut its growth forecast for the UK.

London’s top flight closed 15.16 points, or 0.23 per cent higher, at 6,654.01 at the close of play on Tuesday.

Connor Campbell, financial analyst at Spreadex, said: “The overall mood was helped by the IMF revising its forecasts for the world economy for 2021; the Washington-based institution is now looking for growth of 5.5 per cent this year, compared to the 5.2 per cent increase forecast in October.

“The UK was on the outside looking in, however, when it came to revisions.

“Yet this didn’t end up affecting the FTSE or sterling. “The UK clung onto a 0.3 per cent increase in the face of a complete turnaround from the pound.”

The pound climbed in value despite the Office for National Statistics confirming that the UK unemployment rate nudged higher to 5 per cent for November.

The pound increased by 0.43 per cent versus the US dollar to 1.373 and was up 0.31 per cent against the euro at 1.129.

Across the channel, the other major European markets were lifted by the IMF forecasts despite worries that current tight restrictions, such as the French curfew, will further hinder the economy.

The German Dax was 1.81 per cent higher and the French Cac moved 0.93 per cent higher.

Meanwhile, in the US, the S&P 500 moved to another record high as bullish sentiment continues to linger.

The price of oil increased after reports of a blast in Riyadh, the capital of Saudi Arabia, which drove speculation that supply from the region could be impacted.

The price of Brent crude oil increased by 0.63 per cent to 55.88 dollars per barrel.

The biggest risers on the FTSE 100 were Pearson, up 43.4p to 761.4p, Compass Group, up 59p to 1,380.5p, Johnson Matthey, up 110p to 3,003p, Intermediate Capital Group, up 53p to 1,756p, and Informa, up 14p to 506.8p.

The biggest fallers on the FTSE 100 were M&G, down 7.35p to 183.4p, Just Eat Takeaway, down 302p to 8,120p, Whitbread, down 100p to 2,935p, JD Sports, down 24.8p to 793.2p, and Reckitt Benckiser, down 178p to 6,376p.