UK stocks hit record as manufacturers win business
by Associated Press
LONDONJan 04, 2017 - 12:00 am GMT+3
by Associated Press
Jan 04, 2017 12:00 am
Britain's main stock index struck a record high yesterday as a survey showed manufacturers gaining business from the slide in the value of the pound since the country's decision in June to leave the European Union.
In early-afternoon trading, the FTSE 100 index was up 0.5 percent at 7,182. Though the index is down slightly from its earlier all-time high of 7,205.21, it remains on course to better the previous record closing high of 7,142.83. One of the main reasons why the FTSE 100 has hit a series of highs over the past few months relates to the near 20 percent fall in the value of the pound across an array of currencies since June's "Brexit" decision. On the eve of the vote, the pound was trading as high as $1.50. Now it's around $1.23.
Another survey released Tuesday confirmed the boon provided by the pound's fall. The monthly survey of manufacturers from financial information company IHS Markit and the Chartered Institute of Procurement & Supply showed the sector enjoying a strong rise in new business in December. The so-called purchasing managers' index - a broad gauge of business activity - rose to a two-and-a-half year high 56.1 points in December from the previous month's 53.6. The British economy has fared better since the Brexit vote than many forecasters had predicted. Instead of falling into recession as many had expected, it continued to grow. That was again largely due to the export-boosting fall in the pound as well as further stimulus measures from the Bank of England, including a cut in its main interest rate to a record low of 0.25 percent.
Though manufacturing is improving, the consensus is that the British economy as a whole will falter this year as the uncertainty surrounding Brexit ratchets up.
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