The FTSE has reached an intraday high today, and looks like it’s on course to close at a record high too. The closing number to look out for is 7,104.
The pound continues to come under pressure on the currency markets, which is what is giving impetus to the FTSE 100.
Laith Khalaf, Senior Analyst, Hargreaves Lansdown:
'This is a hollow victory for the UK stock market, because it has been based on movements in the currency markets rather than any positive reassessment of the productivity of UK-listed companies.
Nonetheless UK investors will still be cheered to see a boost to their pension pots and ISA valuations, as it represents a genuine increase to their wealth in pounds and pence.
The concern will be that a reversal in fortunes for the currency could see the gains wiped off as quickly as they appeared. That may well be the case, though it’s hard to see anything in the foreseeable future that’s going to propel the pound back to its former glory.
Meanwhile stock valuations look reasonable, even though FTSE 100 is at a record high, and as long as interest rates remain low, the stock market is really the only game left in town for long term money.
Of course, every silver lining comes with a cloud, and a weaker currency means anyone heading abroad for half term this October is probably in for a nasty shock when they hit the bureau de change. Indeed with some airport outlets giving less than a euro back per pound coin handed over, it makes sense to plan ahead and get the best rate possible.
Longer term, weaker sterling also raises challenges for some sectors, particularly retailers, who face reconciling higher import costs with a highly competitive consumer market.
Indeed we all may soon face higher inflation as a result of a weaker pound, and that could really start to take a toll on cash savers, which could mean even more money finding its way into the stock market in due course.'
NOTES TO EDITORS
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