Budget 2016: FTSE 100 index rallies after chancellor George Osborne's speech

 
James Nickerson
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(FILES) A picture taken 17 April 2007 in...
Sterling was taking a beating on the Budget (Source: Getty)

The FTSE 100 rallied after the chancellor delivered his budget.

The UK's blue-chip index rose by close to 0.75 per cent after Osborne completed his speech.

Housebuilders led the rally after investors were cheered government plans to encourage building of new homes on brownfield land.

And oil and gas stocks also benefited after Osborne delivered tax relief to the UK North Sea oil and gas industry.

"Hikma Pharmaceuticals saw a huge turnaround from early losses of over eight per cent to topping the FTSE 100 with gains of over five per cent as brokers reaffirmed overweight and buy ratings," said Jasper Lawler, markets analyst at CMC Markets.

But sterling fell during the speech. The currency fell 0.6 per cent against the US dollar, while it also dropped 0.34 per cent against the euro.

Sterling fell as Osborne said the Office for Budget Responsibility (OBR) was downgrading UK economic growth.

The OBR believe the economy will grow two per cent 2016, 2.2 in 2017 and 2.1 in each of three years after, chancellor George Osborne said today.

The pound fell as low as $1.4057, near a two week low.

More broadly, "the pound has lost against all of its G10 peers over the past month as the market increasingly factors in Brexit risks", said Ipek Ozkardeskaya, market analyst at London Capital Group.

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