Markets

Sterling falls against dollar and euro as Bank of England fails to give clues on rate hike

Sterling lost ground against the dollar and euro yesterday as an expected interest rate hike failed to materialise

THE pound lost ground yesterday after key officials from the Bank of England failed to give any clues on whether they would join growing calls for an interest rate hike at the next Monetary Policy Committee (MPC) meeting.

Sterling was trading around 0.2 per cent higher versus the US dollar in the early afternoon, but dropped to minus 0.3 per cent to around 1.283 after the speeches were released.

The currency also lost ground against the euro and was down 0.7 per cent at 1.122 by the stock market close.

Connor Campbell, a financial analyst at SpreadEx, said: "The pound suffered the biggest change in direction this Tuesday.

"Having gotten hyped this morning for a double dose of MPC intrigue from Bank of England chief economist Andy Haldane and deputy governor Ben Broadbent, the currency ended up bitterly disappointed that the rate hike elephant in the room wasn't addressed by either man."

The FTSE 100 ended the day down 0.55 per cent or 40.27 points at 7,329.76, while the French Cac 40 and German Dax fell by 0.48 per cent and 0.07 per cent respectively.

In oil markets, Brent crude prices jumped 1.5 per cent to US$47.71, reversing an earlier sell-off sparked by a number of price forecast downgrades by banks including Goldman Sachs.

Education group Pearson was the worst performer on the FTSE 100, dropping 5.5p to 655p, after selling off a 22 per cent stake in its publishing unit Penguin Random House to Germany's Bertelsmann for around US$1 billion (£776 million).

Marks & Spencer shares were also among the biggest losers on London's blue chip index, falling 15.9p to 323.1p after reporting a 1.2 per cent drop in like-for-like sales in its in its clothing and home division over the 13 weeks to July 1, while food sales dropped 0.1 per cent.

Away from the top tier, Galliford Try shares soared 94p to 1,261p as the housebuilder said pre-tax profits for the year to June would come in at the top end of expectations – between £46m to £59m.

Page Group slumped 11.4p to 477.8p despite posting a record profit for the second quarter, as the recruitment firm warned that Brexit and political uncertainty were continuing to hit the UK jobs market.

GoCompare jumped 7.75p to 111.5p after revealing it is on track for a 22 per cent leap in half-year earnings, while Young & Co's Brewery A shares ended the day higher by 7.5p at 1,310p as the recent heatwave helped raise like-for-like sales by 8.6 per cent across its managed pubs.

The biggest risers on the FTSE 100 were Glencore up 6.45p at 307.5p, Anglo American up 16.5p to 1,084.5p, Fresnillo up 17p to 1,447p, and Worldpay Group up 3p at 376p.

The biggest fallers were Pearson down 35.5p at 655p, Marks & Spencer Group down 15.9p at 323.1p, Associated British Foods down 121p to 2,845p, and Prudential down 48.5p at 1,750p.

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