UK retail sales and Trump jitters push pound higher against dollar
The pound rose above 1.30 against the US dollar for the first time since September, as strong UK retail sales gave a boost to sterling and jitters surrounding calls for Donald Trump's impeachment weighed on the greenback.
Sterling was up more than 0.4% versus the US dollar at 1.303, its highest level in nearly eight months. Against the euro, the pound jumped 0.8% to 1.171.
Investors piled into the UK currency after retail sales outstripped expectations, rising by 2.3% in April compared with the month before, due in part to the later timing of Easter holidays and warmer weather.
Data from the Office for National Statistics (ONS) showed sales were up by 4% compared with April last year, exceeding forecasts of 1% monthly growth and 2% year-on-year.
David Madden, a market analyst at CMC Markets UK, said: " The positive run of UK economic data coupled with the political uncertainty in the US could see the 1.30 mark as a base to go long from."
The strength of the UK currency weighed on the FTSE 100, which dropped more than 100 points or 1.3% to 7,402.68 in morning trading.
Global stocks and the US dollar have also suffered from investor anxiety over growing calls for Mr Trump to be forced out of office.
It comes amid reports that Mr Trump told recently fired FBI boss James Comey to drop his investigation into former security adviser Michael Flynn's ties to Russia, and shared secrets about Islamic State militants with Russian officials during a meeting last week.
European equities also fell, with the French Cac 40 and German Dax down by around 1% and 0.9% respectively.
In oil markets, Brent crude prices dipped 1.3% to 51.34 US dollars (£39.39) per barrel as investors fretted about a smaller than expected drop in US crude inventories reported by the US Energy Information Administration.
In UK stocks, Burberry shares jumped 39p to 1,680p after a 10% rise in annual underlying profits thanks to the weaker pound, which bolstered foreign income.
Royal Mail rose 7p to 437.8 after reporting that pre-tax profits rose 25% to £335 million in the year to March 26, with revenue rising 1% to £9.78 billion.
Travel giant Thomas Cook saw shares rise 0.6p to 94.5p as half-year revenues rose 2.6% on a like-for-like basis to £3 billion in the six months to March 31, while bookings to Egypt and Turkey started to recover after terrorist attacks hit demand.
Mothercare shares slumped 4p to 124.5p as it announced a plan for more high street store closures and reported underlying losses of £4.4 million for its UK business in the first half of its financial year.
Greggs rose 3p to 1,074p as like-for-like sales rose 3.6% in the 19 weeks to May 13, boosted by its healthy eating ranges.
Shares in Marston's fell 1.7p to 142.3p despite a string of brewer and pub acquisitions and a 3% rise in underlying half-year profits.