The FTSE 100 climbed to record intraday high today, reaching 7,128.03 by midday.
London’s blue-chip index was supported by the weak pound, which dropped to $1.2247 earlier today. However, in an address to the Treasury Select Committee, the Monetary Policy Committee’s Michael Saunders played down the impact of the tumbling currency on prices, saying the Bank of England could “look through” it.
Strong performance from retailers also supported the FTSE, with data released by the British Retail Consortium showing that retail sales grew 0.4 per cent month-on-month in September, having fallen 0.9 per cent in August.
Laith Khalaf, senior analyst at Hargreaves Lansdown, says the buoyed FTSE is “a hollow victory” as it has been driven by the currency markets, “rather than any positive reassessment of the productivity of UK-listed companies”.
He adds: “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.
“Longer term, weaker sterling also raises challenges for some sectors, particularly retailers, who face reconciling higher import costs with a highly competitive consumer market.”