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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/oct/04/pound-dollar-low-construction-imf-brexit-business-live
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| Pound slides to 31-year low, as FTSE 250 hits record high – as it happened | |
| (35 minutes later) | |
| 5.34pm BST | |
| 17:34 | |
| Closing summary: Shares surge, pound slumps | |
| After a wild day in the markets, it’s time to wrap things up. | |
| Fears of a Hard Brexit have sent the pound reeling to a new 31-year low tonight. Sterling traded as low as $1.2721, its weakest point since 1985, on growing expectations that the UK will leave the single market. | |
| Currency expert Kathleen Brooks, of FOREX.com and City Index, pinned the blame on events at the Conservative party conference in Birmingham. | |
| The Tory party conference is turning into a sell for the pound, as FX traders get spooked by May’s apparent sanguine attitude to leaving the single market, preferring to focus on immigration and UK sovereignty rather than the economic fallout of Brexit. | |
| PM Theresa May has insisted that the economy is in good shape, with growth looking solid and unemployment low. | |
| While the pound weakened, Britain’s stock market went on a tear today. The FTSE 100 jumped by 90 points, having come within a whisker of hitting its alltime intraday high. | |
| The smaller FTSE 250 index did hit a record high. | |
| Analysts said the weak pound had helped to drive share prices higher, as it will help exports and make overseas earnings more valuable. | |
| Jasper Lawler of CMC Markets says: | |
| Reports that UK Prime Minister Theresa May is not looking for any favourable treatment for the financial services sector has been cited as one reason behind the latest sterling decline. | |
| It wasn’t all currency effect through – the FTSE 250, which does have its fair share of firms with foreign earnings, is more domestically focused. | |
| At the moment, UK investors are getting their cake and eating it. The threat of more rate cuts and money-printing from the Bank of England if the government chooses a “Hard Brexit” has sent the British pound lower, but UK economic data continues to impress. | |
| City wine bars overflow as FTSE 100 closes up 1.30% at 7,074.34 passing level last seen in May 2015. Provident Financial +7%. 🇬🇧 #UKshares | |
| The International Monetary Fund pulled a u-turn, admitting that Britain won’t fall into recession next year. It expects the UK to be the best-performing G7 country this year, before slowing in 2017. | |
| Michael Saunders, a Bank of England policymaker, has predicted that Brexit won’t be as bad as feared. | |
| And a new survey has shown that the construction sector returned to growth in September; the latest sign that British companies aren’t being toppled by Brexit fears. | |
| There’s loads more analyst comment and reaction if you scroll back through the blog. | |
| I’ll be back tomorrow for more coverage, including a healthcheck on the UK services sector. | |
| Thanks for reading and commenting. GW | |
| Updated | |
| at 5.35pm BST | |
| 5.12pm BST | 5.12pm BST |
| 17:12 | 17:12 |
| 5.11pm BST | 5.11pm BST |
| 17:11 | 17:11 |
| Theresa May: Currencies go up and down | Theresa May: Currencies go up and down |
| Prime minister Theresa May has insisted tonight that the economic fundamentals of the UK economy remain strong. | Prime minister Theresa May has insisted tonight that the economic fundamentals of the UK economy remain strong. |
| During an interview with the BBC, May pointed to recent upbeat surveys - and the new forecasts issued by the IMF today. | During an interview with the BBC, May pointed to recent upbeat surveys - and the new forecasts issued by the IMF today. |
| And asked about the pound hitting a 31-year low today, she said: | And asked about the pound hitting a 31-year low today, she said: |
| Currencies of course go up and down. If you look at the fundamentals of the economy, it’s strong. | Currencies of course go up and down. If you look at the fundamentals of the economy, it’s strong. |
| If you look at recent economic data, the forecasts coming out now for growth this year, it’s all more positive than people had expected it to be. | If you look at recent economic data, the forecasts coming out now for growth this year, it’s all more positive than people had expected it to be. |
| She also reiterated that she wants to get the “right deal” for the UK; one that lets British businesses both operate in and trade with the single market. | She also reiterated that she wants to get the “right deal” for the UK; one that lets British businesses both operate in and trade with the single market. |
| PM @theresa_may says wants UK businesses to have "best possible opportunity" to "trade with" AND "operate within" Single Market | PM @theresa_may says wants UK businesses to have "best possible opportunity" to "trade with" AND "operate within" Single Market |
| 5.05pm BST | 5.05pm BST |
| 17:05 | 17:05 |
| Despite today’s soaring shares, the weakness of the pound underlines that there are big worries about Brexit. | Despite today’s soaring shares, the weakness of the pound underlines that there are big worries about Brexit. |
| James Andrews, head of investment management at stockbroking firm Redmayne-Bentley, warns that a selloff could be painful: | James Andrews, head of investment management at stockbroking firm Redmayne-Bentley, warns that a selloff could be painful: |
| “The heady heights we see in the UK equity markets currently reflect the lack of returns to be found in less risky assets, such as cash and bonds. The FTSE 100 is no longer a gauge of the UK economy, given it is full of large multi-national companies, but the more domestic-focussed FTSE 250 is also touching all-time highs. | “The heady heights we see in the UK equity markets currently reflect the lack of returns to be found in less risky assets, such as cash and bonds. The FTSE 100 is no longer a gauge of the UK economy, given it is full of large multi-national companies, but the more domestic-focussed FTSE 250 is also touching all-time highs. |
| “The likely fallout of messy negotiations around the exit from the EU mean it is an uncomfortable view from the summit currently, and it’s a long way down if the future turns out to be less than rosy.” | “The likely fallout of messy negotiations around the exit from the EU mean it is an uncomfortable view from the summit currently, and it’s a long way down if the future turns out to be less than rosy.” |
| 4.58pm BST | 4.58pm BST |
| 16:58 | 16:58 |
| FTSE 250 hits record high | FTSE 250 hits record high |
| We do have a record to celebrate, though. | We do have a record to celebrate, though. |
| The FTSE 250 index has closed at its highest ever level, up 0.9% or 158 points at 18342. | The FTSE 250 index has closed at its highest ever level, up 0.9% or 158 points at 18342. |
| That’s significant, as this index contains more UK companies than the Footsie 100 -- including engineering firm Renishaw (+4% today) and security firm G4S (+3.3%). | That’s significant, as this index contains more UK companies than the Footsie 100 -- including engineering firm Renishaw (+4% today) and security firm G4S (+3.3%). |
| The #FTSE250 has reached an all-time closing high of 18,342 after climbing above 18,550 during the day | The #FTSE250 has reached an all-time closing high of 18,342 after climbing above 18,550 during the day |
| 4.53pm BST | 4.53pm BST |
| 16:53 | 16:53 |
| #Breaking The FTSE 100 Index closed up 90.82 points to 7074.34, just short of the record closing price of 7104. pic.twitter.com/2aiMbJHROt | #Breaking The FTSE 100 Index closed up 90.82 points to 7074.34, just short of the record closing price of 7104. pic.twitter.com/2aiMbJHROt |
| 4.44pm BST | 4.44pm BST |
| 16:44 | 16:44 |
| FTSE 100 fails to hit record high | FTSE 100 fails to hit record high |
| A groan ripples around City trading floors, as the FTSE 100 fails to hit a new record closing high. | A groan ripples around City trading floors, as the FTSE 100 fails to hit a new record closing high. |
| The blue-chip index closed up 90 points, or 1.3%, at 7074. That is a new 17-month closing high, but not the record. | The blue-chip index closed up 90 points, or 1.3%, at 7074. That is a new 17-month closing high, but not the record. |
| It was still a good day for shares, with some internationally focused firms like Rolls-Royce and Pearson leading the rally. | It was still a good day for shares, with some internationally focused firms like Rolls-Royce and Pearson leading the rally. |
| But the temptation to take profits took the wind out of the markets’ sails at the end. | But the temptation to take profits took the wind out of the markets’ sails at the end. |
| It was quite a dramatic day, as Joshua Mahony, market analyst at IG, explains: | It was quite a dramatic day, as Joshua Mahony, market analyst at IG, explains: |
| Today’s incredible rise in the FTSE 100 has been one of the biggest risk on moves of the year, with investors seeing in Q4 with a bang. | Today’s incredible rise in the FTSE 100 has been one of the biggest risk on moves of the year, with investors seeing in Q4 with a bang. |
| Fears over the economic implications of a Brexit have been brushed aside in favour of a focus on the benefits a weak pound and loose monetary policy would bring to stocks. As Phillip Hammond said, we are in for a roller coaster, yet on initial evidence, markets like the idea. | Fears over the economic implications of a Brexit have been brushed aside in favour of a focus on the benefits a weak pound and loose monetary policy would bring to stocks. As Phillip Hammond said, we are in for a roller coaster, yet on initial evidence, markets like the idea. |
| Updated | Updated |
| at 4.47pm BST | at 4.47pm BST |
| 4.31pm BST | 4.31pm BST |
| 16:31 | 16:31 |
| The stock market has gone into its closing auction!.... And we’re about to find out if the FTSE 100 has hit a new record closing high.... | The stock market has gone into its closing auction!.... And we’re about to find out if the FTSE 100 has hit a new record closing high.... |
| Updated | Updated |
| at 4.31pm BST | at 4.31pm BST |
| 4.26pm BST | 4.26pm BST |
| 16:26 | 16:26 |
| BoE policymaker: Brexit won't be too bad | BoE policymaker: Brexit won't be too bad |
| Michael Saunders, the newest member of the Bank of England’s monetary policy committee, has fired a broadside at his colleagues for being too pessimistic over Brexit. | Michael Saunders, the newest member of the Bank of England’s monetary policy committee, has fired a broadside at his colleagues for being too pessimistic over Brexit. |
| In a speech just released (due to be given tomorrow), Saunders says that the EU will probably cause rather less damage than policymakers had feared. | In a speech just released (due to be given tomorrow), Saunders says that the EU will probably cause rather less damage than policymakers had feared. |
| He cites Britain’s “considerable supply-side advantages”, from its flexible labour market and openness to foreign investment, to the current “low-ish” tax rates and strong position in high-tech manufacturing and knowledge-intensive services. | He cites Britain’s “considerable supply-side advantages”, from its flexible labour market and openness to foreign investment, to the current “low-ish” tax rates and strong position in high-tech manufacturing and knowledge-intensive services. |
| So Saunders (who was a top economist at Citigroup until he joined the BoE rate-setting this summer), reckons growth in 2017 will be stronger than expected. | So Saunders (who was a top economist at Citigroup until he joined the BoE rate-setting this summer), reckons growth in 2017 will be stronger than expected. |
| After a good lunch, Saunders will tell the Institute of Directors in Manchester tomorrow that: | After a good lunch, Saunders will tell the Institute of Directors in Manchester tomorrow that: |
| The process of EU exit may be lengthy and bumpy. It is certainly possible that anticipation of EU exit will have a greater near-term adverse effect on the economy than the MPC expect, especially if EU nationals currently working in the UK decide to leave or business investment weakens really markedly. But, unless Brexit-related uncertainties rise sharply and/or global conditions disappoint markedly, I suspect that the UK economy will be not too bad in the year ahead, with growth in 2017 more likely to be clearly above 1% rather than (as the consensus expects) below 1%. | The process of EU exit may be lengthy and bumpy. It is certainly possible that anticipation of EU exit will have a greater near-term adverse effect on the economy than the MPC expect, especially if EU nationals currently working in the UK decide to leave or business investment weakens really markedly. But, unless Brexit-related uncertainties rise sharply and/or global conditions disappoint markedly, I suspect that the UK economy will be not too bad in the year ahead, with growth in 2017 more likely to be clearly above 1% rather than (as the consensus expects) below 1%. |
| Hence, especially if productivity growth remains modest, there may be little or no rise in unemployment in the UK over the coming year, although the current degree of slack would remain unless growth is strong enough to cut unemployment further. | Hence, especially if productivity growth remains modest, there may be little or no rise in unemployment in the UK over the coming year, although the current degree of slack would remain unless growth is strong enough to cut unemployment further. |
| You can see the speech here (lunch, alas, not included) | You can see the speech here (lunch, alas, not included) |
| The economic outlook - speech by Michael Saunders | The economic outlook - speech by Michael Saunders |
| 4.15pm BST | 4.15pm BST |
| 16:15 | 16:15 |
| Some investors who bought shares after the Brexit vote will be cashing in their | Some investors who bought shares after the Brexit vote will be cashing in their |
| hard-earned gains | hard-earned gains |
| winnings this afternoon. | winnings this afternoon. |
| So says Michelle McGrade, chief investment officer at online dealing group TD Direct Investing. | So says Michelle McGrade, chief investment officer at online dealing group TD Direct Investing. |
| “With the FTSE peaking 7,100 this afternoon, our customers are predominantly selling today - demonstrating their savviness. Experienced investors have been buying up since Brexit and seemingly now enjoying the profits. The important thing for the markets is that it holds 7,000 overnight – this will be impacted by how the S&P 500 behaves. | “With the FTSE peaking 7,100 this afternoon, our customers are predominantly selling today - demonstrating their savviness. Experienced investors have been buying up since Brexit and seemingly now enjoying the profits. The important thing for the markets is that it holds 7,000 overnight – this will be impacted by how the S&P 500 behaves. |
| She also urges small investors to be cautious... | She also urges small investors to be cautious... |
| “From a broader perspective, we hope that those less experienced investors aren’t getting too excited by the excitement and piling in, for the first time, while it’s high – this isn’t the best investment strategy and they will lose their confidence yet again.” | “From a broader perspective, we hope that those less experienced investors aren’t getting too excited by the excitement and piling in, for the first time, while it’s high – this isn’t the best investment strategy and they will lose their confidence yet again.” |
| 4.08pm BST | 4.08pm BST |
| 16:08 | 16:08 |
| Ben Chu, the economics editor of the Independent, has done a nice piece about the causes of the pound’s weakness. | Ben Chu, the economics editor of the Independent, has done a nice piece about the causes of the pound’s weakness. |
| He says: | He says: |
| This week’s renewed downward lurch has coincided with Theresa May saying she will trigger Article 50 before next March and making it clear that she will not compromise on curbing EU immigration to the UK, something that strongly implies Britain will be out of the single market by 2019. | This week’s renewed downward lurch has coincided with Theresa May saying she will trigger Article 50 before next March and making it clear that she will not compromise on curbing EU immigration to the UK, something that strongly implies Britain will be out of the single market by 2019. |
| The fundamental reason for sterling’s descent is that traders believe there will be lower demand for sterling assets as a result of Brexit – that we will ultimately do less trade with the rest of the world and that we will be poorer as a result. Argue the markets are wrong if you want to – but recognise what they are saying. | The fundamental reason for sterling’s descent is that traders believe there will be lower demand for sterling assets as a result of Brexit – that we will ultimately do less trade with the rest of the world and that we will be poorer as a result. Argue the markets are wrong if you want to – but recognise what they are saying. |
| The economic reasons the pound is falling. My @IndyVoices column: https://t.co/17GAnZ6Y8C pic.twitter.com/nZGw7SnmTi | The economic reasons the pound is falling. My @IndyVoices column: https://t.co/17GAnZ6Y8C pic.twitter.com/nZGw7SnmTi |
| 3.57pm BST | 3.57pm BST |
| 15:57 | 15:57 |
| Financial reporters are squinting at their terminals, desperate to see if the Footsie hits a record high today (we’re easily amused, to be honest) | Financial reporters are squinting at their terminals, desperate to see if the Footsie hits a record high today (we’re easily amused, to be honest) |
| Nerves kicking in as #FTSE100 stands 2 points away from all-time high. pic.twitter.com/YBBI8g5HmD | Nerves kicking in as #FTSE100 stands 2 points away from all-time high. pic.twitter.com/YBBI8g5HmD |
| 3.52pm BST | 3.52pm BST |
| 15:52 | 15:52 |
| Ooooh the FTSE 100 is pushing even higher as the clock ticks down to 4.30pm. | Ooooh the FTSE 100 is pushing even higher as the clock ticks down to 4.30pm. |
| It just hit 7121 points, a whisker away from the record intraday high of 7122 (set in April 2015). | It just hit 7121 points, a whisker away from the record intraday high of 7122 (set in April 2015). |
| Oh, and I made a mistake before. The all-time record closing high is 7104. And that record is ON.... | Oh, and I made a mistake before. The all-time record closing high is 7104. And that record is ON.... |
| Updated | Updated |
| at 3.52pm BST | at 3.52pm BST |
| 3.41pm BST | 3.41pm BST |
| 15:41 | 15:41 |
| With one hour to go, the FTSE 100 index is just three points away from its record closing high, at 7009 points. | With one hour to go, the FTSE 100 index is just three points away from its record closing high, at 7009 points. |
| Richard Stone, chief executive at The Share Centre, explains why the weak pound has pushed shares up: | Richard Stone, chief executive at The Share Centre, explains why the weak pound has pushed shares up: |
| For companies in the FTSE100, some three quarters of their revenues are not earned in Sterling so are now worth more in Sterling terms. This makes their profits higher in Sterling and therefore their value in Sterling terms also increases. | For companies in the FTSE100, some three quarters of their revenues are not earned in Sterling so are now worth more in Sterling terms. This makes their profits higher in Sterling and therefore their value in Sterling terms also increases. |
| Updated | Updated |
| at 3.51pm BST | at 3.51pm BST |
| 3.40pm BST | 3.40pm BST |
| 15:40 | 15:40 |
| The IMF’s new report hasn’t helped the pound; it’s still wallowing at the 31-year low of $1.275. | The IMF’s new report hasn’t helped the pound; it’s still wallowing at the 31-year low of $1.275. |
| Betway, the gambling firm, are offering odds on it falling further, and even hitting parity, before the end of the year. | Betway, the gambling firm, are offering odds on it falling further, and even hitting parity, before the end of the year. |
| Lowest GBP/USD rate in 2016: | Lowest GBP/USD rate in 2016: |