The FTSE 100 has built on yesterdays gains as a weakening the pound pushes London’s leading index higher. A softening in the tone from both North Korea and The United States also helped sentiment.
As of 1.00pm the FTSE 100 was up 0.52% at 7392, outperforming its European counterparts.
Inflation steady
Consumer Price Inflation came in lower than expected to remain at 2.6%. Retail Price Inflation (RPI) came in at 3.6 per cent, higher than the 3.5 per cent estimated.
The tick higher in RPI means rail fares will now rise by 3.6% in 2018 as rail operators use July’s reading of RPI as a measure of price increases.
The steady read in inflation has dampened expectations the Bank of England will be forced to hike rates to control inflation which could risk unintended consequences for the wider economy.
“The Bank of England was expecting inflation to peak at about 3 percent in October, but the fact it was only 2.6 percent in July might mean that will not be as high as previously thought,” said market strategist, Mike Bell, at JP Morgan Asset Management.
The pound dropped against major currencies in the wake of the announcement with GBP/USD touching 1.2867, the lowest level for the month.
The weaker pound again provided support for the FTSE 100 and the index rose rallied to highs of 7397.
Small & Mid Cap Movers
Housing and social care provider Mears sunk 11.7% to 428.25p after it announced forecasted revenues to be £30m lower than previously expected. The tragic events at Grenfell tower are said to impact the housing division and the client’s decisions to reassure their safety of their properties.
Pawnbrokers, H&T Group have reported a very strong start to the year with a 62.2% increase in first half pre-tax profits to £6m driven by strong sales revenue in all categories. This resulted in operating profit increasing by £3.3m to £28.5m. The average gold price per troy ounce increased by about 15.5% which was the main factor driving gross profit higher.