THE POUND briefly hit a two-and-a-half year low against the dollar yesterday, just as the FTSE 100 crashed through the 6,500 level it has not breached since 2008.
Continuing the 2013 bear run that has seen some 8.4 per cent knocked off its value against the dollar, sterling fell 0.3 per cent to $1.487, the lowest it has been since mid-2010, before rising to around $1.491 in later trading.
Willem Sels at HSBC Private Bank put the move down to stagnation in the UK, combined with relatively active British monetary policy vis-a -vis the US and the Eurozone, as well as an improving global risk appetite which is pulling funds out of so-called safe havens.
He also said the uncertainty over Bank of England policy is reducing investors’ appetites to hold sterling. “What exactly the Bank is up to is unclear – uncertainty does not inspire confidence and we see this as a negative for sterling,” Sels explained.
Meanwhile the FTSE was scaling heights not seen since early 2008, up 0.3 per cent at 6,503.63.
Analysts said this surge – which came in tandem with highs on the main US indices – came from stronger than expected economic figures across the atlantic.
“We are just grinding higher on the back of stronger US data that we keep seeing,” said Saxo Bank’s Adam Seagrave.
This supportive data saw the S&P 500 up 0.3 per cent at 1,556.27, its highest point since October 2007, and the Dow Jones Industrial Average climb 0.4 per cent to 14,447.29, again breaking its all-time record.