The FTSE 100 closed at a fresh record high on Friday, despite the Bank of England’s decision earlier this week to raise interest rates for the first time in over a decade.
The UK index of blue chip shares finished the trading session up 0.07 per cent at 7,560.35, beating the previous record close of 7,556.24 set on 12 October.
The FTSE 100 has increased by around 20 per cent since the June 2016 Brexit referendum, although it has been supported by a slump in the pound in the wake of the vote.
Since many of the firms in the index are multinationals with revenues in foreign currencies, a weaker sterling tends to support profits and valuations.
Sterling finished the day up 0.57 per cent against the euro at €1.1262 and up 0.15 per cent against the dollar at $1.3070.
Since the referendum sterling remains 13.8 per cent down against the greenback.
New record high
“Cash savers might still be waiting for the latest interest rate rise to feed through into their bank accounts, but stock market investors continue to reap the rewards of loose monetary policy and an improving global economy,” said Laith Khalaf of Hargreaves Lansdown.
“The global economy is doing pretty well at the moment, and with interest rates still staying low, that bodes well for the prospects for the stock market.”
On Thursday the Bank of England lifted its base rate from 0.25 per cent to 0.5 per cent, the first increase in the general cost of borrowing since July 2007, and the Bank’s forecast suggested at least two more hikes would be needed over the next three years to bring inflation back down to 2 per cent.
However, the decision prompted a 1.7 per cent drop for sterling against the dollar on Thursday, suggesting some scepticism among financial traders about whether such a degree of monetary tightening will be feasible as the UK heads towards Brexit in March 2019.
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