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.
Gertjan Vlieghe, an external voting member of the Bank’s Monetary Policy Committee, said he has been “struck” by a series of developments in the UK economy – including high inflation – and pointed to the wider economic backdrop of “improving global growth” over the past year.
European markets also drifted lower on Friday, with Germany’s Xetra Dax and the Cac 40 in France both slipping by 0.2%.
However, the price of oil was 0.2% higher at 55.57 a barrel following forecasts of increased demand and reports US refineries kicking back into gear.
In UK stocks, pub group JD Wetherspoon was the biggest riser on the second tier thanks to rising full-year sales and profit, while the pub chain’s Brexit-backing chairman took aim at EU “oligarchs” in yet another rant.
Revenue rose 4.1% to £1.66bn in the year to July 30 as the group booked profits of £102.8m, an increase of 27.6%.
Like-for-like sales rose 4% in the period, with Wetherspoon saying that comparable sales have increased by 6.1% since August.
Shares soared more than 13%, or 145p to 1,189p.
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.