The FTSE 100 looked set to round out a second week of record gains at lunchtime on Friday, as sterling performance wobbled in volatile trading.
Sterling rose as high as $1.2233, but cable has since retreated to trade almost flat at the time of publication. Performance against the euro has fallen more steeply, with losses of 0.35 per cent to trade at €1.1419.
Housebuilder Barratt Developments led the FTSE, with a three per cent gain, as investors piled back in after a torrid day yesterday. Barratt’s London completions fell by more than 50 per cent, prompting the sell-off.
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The pound has come under pressure over the past day ahead of a major speech by Theresa May on Tuesday. The Prime Minister is set to add more detail to her public position on the negotiating strategy for the upcoming Brexit negotiations.
Investors have seized on any small hint of detail on what lies ahead for the UK’s relationship with the EU. May’s comments in a television interview on Sunday that immigration controls were paramount in negotiations sent the pound to its lowest level since October.
Markets took the comments to mean the UK would leave the Single Market. European politicians have repeatedly stressed Single Market membership is not consistent with a decline in freedom of movement.
Chris Saint, a senior analyst at Hargreaves Lansdown, said: “Sterling has lost more than two cents against the euro since weekend comments from Mrs May that the UK cannot expect to hang on to “bits” of its EU membership reawakened fears over a ‘hard Brexit’.”