London stocks slide as pound soars to highest level since Brexit
LONDON: The London stock market slid Friday as investors shrugged off news of a terror attack in the British capital and instead took their cue from the surging pound.
Sterling shot up after a Bank of England policymaker signalled a rate hike for “the coming months,” after UK borrowing costs were this week left on hold at a record-low 0.25 percent.
Comments from BoE policymaker Gertjan Vlieghe echoed the central bank’s signal this week that the first rate increase in a decade could come in “coming months,” pushing the pound past the $1.36 mark for the first time since Britain voted to leave the EU.
That left it up over 1.5 percent and a full two cents above the $1.34 it touched after Thursday’s BoE policy decision, and it put sterling on track for a 3.3 percent weekly gain on a trade-weighted basis — its best performance since February 2009.
Markets reacted little meanwhile to an attack on a London Underground train at Parsons Green, southwest London, which police are treating as a terrorist incident after a number of people were injured.
“Londoners and markets alike take these sorts of incidents in their stride,” ETX Capital analyst Neil Wilson told AFP.
“The FTSE’s drop today is by and large about the pound’s rally, as that depresses the foreign earnings of lots of the big blue chips.”
In late morning deals, the British capital’s FTSE 100 index of top companies slid 1.1 percent as sterling rebounded.
“The FTSE is suffering at the hands of a rampant pound,” added IG analyst Joshua Mahony.
Euro zone trading was muted on Friday with Frankfurt and Paris stocks holding steady ahead of the weekend pause.