Rate-related pound gains to FTSE’S cost

Market report Emma Newlands

Sterling received a shot in the arm from the Bank of England, which fuelled market expectations for a summer hike in interest rates.

The central bank held interest rates at 0.5 per cent, with members of the monetary policy committee voting 6-3 to keep rates unchanged, with Andy Haldane switching sides to join fellow dissenters Ian Mccafferty and Michael Saundersinpushingforanimmediateincrease to 0.75 per cent.

The news sent the pound rocketing against the dollar and euro, rising 0.6 per cent to $1.325 and 0.3 per cent to €1.141 respectively.

Currency traders interpreted the voting pattern as indicating an increase as soon as August. But Fiona Cincotta, senior market analyst at City Index, cautioned that any hike is dependent on economic data in the coming months. “The tone of the meeting shows the BOE are wanting to hike should the data allow it. We therefore expect to see more volatility than usual surrounding high impacting data releases across the start of the summer.”

The pound’s rise came at the expense of the FTSE 100, which gave up gains earlier in the session to end the day in the red. The index closed down 70.96 points at 7,556.44.

In stocks, shares in Dixons Carphone rose 4.5p to 195.25p. This was despite the retailer posting a slump in annual profits, a week after coming clean about a major cyber attack.

The biggest risers on the FTSE 100 included Ocado up 38.5p at 1,040p and Sky up 25p at 1,405p, while the biggest fallers included United Utilities down 48.6p at 739.2p, and Persimmon down 80p at 2,530p. The firm said geopolitical tensions following events such as the Salisbury poisoning and Syrian attacks have revived the defence market. Housebuilding giant Barratt Developments was a big loser in the top flight at the sector in general remained out of favour with investors.