3
Aug
Pound and FTSE hit 10-month highs
The pound and the FTSE 100 index of top UK-listed shares have
hit their highest levels since October on growing hopes for an
economic recovery.
Markets took heart after brighter UK economic data and a rally
in financial stocks following profits from banking giants HSBC and
Barclays.
Sterling rose as high as $1.6925 against the dollar and also hit
a one-month high against the euro.
The FTSE 100 index rose as high as 4,710.23 points.
Shares in Barclays climbed 7.3% after reporting an 8% rise in
half-year profits, while HSBC rose 5.7% after it made
better-than-expected profits of $5bn.
In afternoon trade, the FTSE 100 was up 1.8%, or 85.02 points,
at 4,693.38 points.
Oil prices also rose to a one-month high above $71 a barrel, as
an economic recovery should lead to greater demand for crude.
Lift for pound
The pound got a lift after data showed the UK manufacturing
sector expanded for the first time in more than a year.
Manufacturing activity rose last month for the first time since
March 2008, as new orders came in, according to a survey by the
Chartered Institute of Purchasing and Supply (CIPS) and Markit.
"The manufacturing sector has clearly pulled out of the nosedive
it was in earlier this year and is no longer plummeting," said
David Noble, chief executive of CIPS.
While still a long way below the $2 levels seen in July last
year, the pound has rebounded 25% from the 23-year low of $1.35 it
hit in January this year.
"Over the medium-term we are forecasting for sterling to
continue to gain against the greenback, particularly if banks and
blue-chip stocks show renewed strength, as Barclays did today,"
said David Clements, senior analyst at Caxton FX.
The UK economy is viewed as being particularly reliant on the
banking sector so evidence of any upturn benefits sterling.
The pound has also benefited from recent weakness in the
dollar.
The US currency has suffered as signs of a global economic
recovery have encouraged investors to move their money out of
dollars and into riskier assets.
The dollar is trading near its lowest levels this year when
measured against a group of major currencies.
source: www.bbc.co.uk/news Monday 3rd
August 2009