Mixed picture for pound and FTSE falls

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% versus the US dollar to reach 1.280 for the first time since June 8, but fell 0.16% versus the euro to trade at 1.135.

Sterling’s ascent against the greenback weighed on listed multinationals on the FTSE 100, which tend to benefit when foreign currencies are stronger.

London’s blue chip index fell 0.35% or 26.04 points at 7,474.4.

US data released on Tuesday showed inflation contracting by 0.1% in May, while month-onmonth retail sales fell by 0.3%.

Investors were also awaiting an interest rate decision from the US Federal Reserve.

Jasper Lawler, a senior market analyst at London Capital Group, said: “A double dose of soft economic data sent the US dollar plunging and gold rallying before the Federal Reserve rate decision.

“Slowing inflation and flat retail sales add to the growing sense that today’s meeting could see the last US rate rise this year.”

Across Europe, the French Cac 40 fell into the red to end the day down 0.35%, while the German Dax rose 0.3%.

Sterling was up against the dollar but down against the euro.