Belfast Telegraph

Pound hits one-month low against dollar amid interest rate fears

The value of the pound has sunk to a one-month low against the dollar as the threat of a further interest rate cut dealt a hammer blow to the currency.

Sterling plunged to 1.29 US dollars in earlier trading, before paring losses to a 0.2% fall to 1.30 US dollars, after Bank of England policymaker Ian McCafferty suggested interest rates could be slashed beyond 0.25%.

The Monetary Policy Committee member, writing in a newspaper editorial, also said the Bank's quantitative easing programme could be extended, causing the pound to drop 0.5% against the euro to 1.17 euros.

However, the FTSE 100 Index pushed higher for the fourth consecutive session, rising 42.17 points to 6851.3, thanks to a rally from heavyweight financial stocks after a review of the banking sector by the Competition and Markets Authority.

Investors bought up stocks in Britain's biggest lenders as they felt the industry got off lightly after the watchdog said customers should be able to avoid being stung by overdraft charges by instructing apps to automatically move their money around for them.

State-backed Royal Bank of Scotland was among the biggest risers, up more than 4% or 7.6p to 192.3p, while Barclays climbed 3.8p to 161.2p and Lloyds Banking Group rose 0.5p to 55p.

The market also priced in mixed results from the UK economy in the run-up to the Brexit vote, with the UK manufacturing sector continuing to decline and Britain's trade gap widening again in June after imports reached a record high.

The Office for National Statistics said manufacturing output fell by 0.3%, stepping up from a 0.6% contraction in May but slightly below economists' expectations of a 0.2% drop.

However, industrial production recorded its strongest performance since 1999 in the three months to June.

Meanwhile separate figures from the ONS showed t he UK's deficit on trade in goods and services rose to £5.1 billion from £4.2 billion in May.

In stocks, Standard Life raced ahead as pre-tax operating profits grew 18% in the first half of 2016 to £341 million, up from £290 million a year earlier.

The insurance giant was the best performer on the London market as shares ticked up more than 6% or 2.15p to 340p.

In a contrast of fortunes, insurer Legal & General was the top-flight's worst performer as shares tumbled following declines in its i nvestment management, insurance and savings divisions.

Overall, the firm shrugged off Brexit uncertainty and posted a 23% rise in profits for the first half of the year.

It said pre-tax profits rose to £826 million, flagging that it was able to keep its property funds open during a post-vote meltdown which saw a number of others shut down temporarily.

Shares were down 5% or 12.1p to 206p.

Away from the top flight, online grocer Ocado lifted 18.7p to 295p after agreeing a new partnership deal with supermarket chain Morrisons.

The big four grocer is using Ocado to expand its home delivery service nationwide and offering non-food products to online customers.

Shares in Morrisons rose 3.5p to 191.5p.

Betting giant William Hill also made gains after batting away a takeover approach from Rank Group and 888, saying that the duo's proposal for a £3.6 billion three-way merger "substantially undervalues" the high street bookmaker.

William Hill stepped up 1.6p to 329p.

The biggest risers on the FTSE 100 Index were Standard Life up 21.5p to 340p, Royal Bank of Scotland up 7.6p to 192.3p, TUI up 36.5p to 1016p, and easyJet up 37p to 1076p.

The biggest fallers were Legal & General down 12.1p to 206p, Carnival down 87p to 3589p, Sky down 10p to 898p, and Aviva down 4.5p to 418.5p.