FTSE closes just shy of record high as pound tumbles
The FTSE 100 finished just short of its record close yesterday after hitting new mid-session highs as the pound tumbled on Brexit jitters.
The top-flight index closed down 0.38% or 26.62 points at 7070.88 points, just shy of its all-time closing high of 7103.98. It comes after the top tier set a new mid-session record of 7129.83 points earlier on in the day - marking its highest level since reaching 7122.7 in April 2015.
The post-referendum slump in sterling has been a boon for multinational companies listed on the FTSE 100, because many tend to benefit from earnings in currencies that are stronger than the pound.
Sterling dropped more than 1.2% to trade at around 1.220 against the US dollar. The pound fell over 0.5% to around 1.103 against the euro.
The currency took a hit after leaked Government papers laid bare the cost of leaving the EU.
Papers seen by The Times newspaper showed that leaving the single market and switching to World Trade Organisation rules would cause UK gross domestic product to tumble by up to 9.5% and would cost the Treasury up to £66bn per year, compared with the country remaining in the EU.
The FTSE 100's strong recovery since the Brexit vote has come at the expense of the pound, which is down more than 18% against the US dollar since June 23.
The blue chip index is up by more than 12.5% since the referendum.
Jasper Lawler, a market analyst at CMC Markets, said the momentum that led the FTSE 100 to new mid-session highs was never going to last.
"Uncertainty as to whether the lower pound really is a net positive for the UK economy meant the new record was unsustainable," he added. "An exchange rate shock is not a very stable basis for record high stock prices."
Across Europe, meanwhile, both the Cac 40 and the Dax closed lower.