Wednesday 19 October 2016 9:28 am

The pound's doing what the pound does best

Of course it was too good to be true.

Yesterday, the FTSE 100 rose and the pound was up by more than one per cent against the dollar and the euro.

But those who said such a mighty jump to the giddy highs of $1.23 and €1.12 (compared to $1.48 and €1.30 back in June), would just trigger a fresh round of selling and loss-cutting have been proved right this morning.

After an hour-long rally after a decent jobs report, sterling lost any trace of shine by mid-morning and was back in decline against both the dollar and the euro. After slumping to $1.2260, then surging to $1.2320, the pound was down 0.1 per cent below $1.23. Sterling was also down 0.2 per cent on the day compared to the euro at €1.1174.

The falling pound failed to provide any momentum to bluechip stocks either, as traders were left nervous after building giant Travis Perkins announced 600 job losses.

The FTSE 100 was off by 0.1 per cent in morning trading, back below the psychological barrier of 7,000 at 6,993. Travis Perkins was down 6.6 per cent, followed down by Reckitt Benckiser who shed 2.8 per cent after they missed earnings expectations for the third quarter.

Read more: The £75bn cost of a hard Brexit

Analysts pointed to the double dose of yesterday's inflation data along with various Brexit developments as the reason for the pound's resurgence. Suggestions from the government's legal team that MPs would be able to vote on the final Brexit deal helped allay concerns over a hard Brexit – a majority of parliamentarians voted to stay in the EU – while price rises of one per cent over the year could have dented the prospect that the Bank of England will slash interest rates further when it meets next months.

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