Markets

Pound tumbles as November interest rate rise in doubt

The London skyline as seen from the City. A Bank of England policymaker cast doubts over a widely expected interest rate hike in November impacting the pound and the FTSE PICTURE: Chris Radburn/PA

THE pound tumbled against both the euro and US dollar after comments from a key Bank of England policymaker cast doubts over a widely expected interest rate hike in November.

Sterling fell more than 0.6 per cent versus the US dollar to around 1.311 and tumbled over 0.7 per cent against the euro to trade at 1.115 after deputy bank governor Sir Jon Cunliffe suggested that a rate rise may not be delivered given concerns over Britain's economic forecast.

Connor Campbell, a financial analyst at SpreadEx, said: "Cunliffe, a deputy governor at the Bank of England, argued that a November rate hike is an 'open question' due to the UK's economic weakness, further undermining the hawkishness the central bank showed over the summer.

"The pound could well be in for a nervy few weeks, then, with the interest rate situation seeming to only get murkier as the November meeting grows closer."

The pound's drop weighed on the FTSE 100, which ended the day nearly flat, up just 2.09 points at 7,526.54.

It was also weighed down by Whitbread shares, which tumbled to the bottom of the blue chip index.

Whitbread ended the day down 189p at 3,753p after reporting a further slowdown in sales growth at its Costa Coffee chain, which itself suffered a 9.8 per cent drop in pre-tax profit to £59 million.

It overshadowed figures showing a 7.4 per cent rise in overall company revenue at Whitbread which also reported a 19.9 per cent rise in total statutory pre-tax profit to £316m.

Across Europe, the French Cac and German Dax closed higher by around 0.15 per cent and 0.08 per cent, respectively.

Brent crude prices jumped 1.4 per cent to US$53.10 after Saudi Arabia signalled that it was keen to end the global oil supply glut, giving investors hope that the country would be in favour of maintaining Opec's production cap.

David Madden, a market analyst at CMC Markets, said: "It's no coincidence that the comments come ahead of next month's Opec meeting.

"The major oil producer is one of the main drivers behind the coordinated production freeze, so their voice has influence within the cartel."

In UK stocks, Carillion jumped 2.75p to 46.5p after the troubled infrastructure giant struck a deal to offload the bulk of its UK healthcare arm to Serco for £50m, as part of Carillion's plan to sell off £300m of non-core assets by the end of 2018.

Bloomsbury shares edged higher by 1.5p to 163p after reporting a 15 per cent jump in total revenues to £72.1m in the six months to August 31, while pre-tax profit jumped from £100,000 to £1.7m.

Print revenues were up 16 per cent to £60.1m as a Harry Potter Box Set and the new House Editions of Harry Potter And The Philosopher's Stone proved popular.

The biggest risers on the FTSE 100 were Antofagasta up 28p at 1,031p, Standard Chartered up 15.6p at 783.3p, St James's Place up 23p to 1,193p, and Rentokil Initial up 4.7p at 326.3p.

The biggest fallers on the FTSE 100 were Whitbread down 189p at 3,753p, WPP down 42p at 1,324p, Paddy Power Betfair down 210p at 7,505p, and Convatec Group down 5.7p to 207.3p.

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