FTSE 100 hits record high as pound continues to tumble over Brexit fears
The FTSE 100 has hit a record high as the pound tumbled further on Brexit jitters.
This index rose above 7122.7 to 7129.83 points in mid-session trading - the highest level since April 2015.
The top tier has been surging higher while sterling has taken a battering since the Brexit vote, as many of the listed multinational companies benefit from earnings in stronger foreign currencies.
Sterling dropped more than 0.8% to trade as low as 1.225 against the US dollar on Tuesday. Sterling fell around 0.3% to around 1.106 against the euro.
The FTSE 100 has made a healthy recovery since the Brexit vote.
The blue chip stock index has jumped around 12.5% since June 23, while sterling has slumped more than 18% against the US dollar over the same period.
Sterling ducked even lower on Tuesday after leaked government papers laid bare the cost of leaving the EU.
Papers seen by The Times showed that leaving the single market and switching to World Trade Organisation (WTO) rules would cause gross domestic product (GDP) to fall by up to 9.5% and cost the Treasury up to £66 billion per year, compared with if the country remained in the EU.
Connor Campbell, a financial analyst at SpreadEx, said the news has "thrown more fuel on the fearful fire ... leaving the markets to deal with another day of sterling dread".
He added: "With that in mind, the pound, of course, has woken up wheezing and spluttering, continuing to shed an amount of blood that is apt for a month ending with Halloween."
Neil Wilson, a markets analyst at ETX Capital, said enthusiasm over the FTSE 100's new intraday high may be misplaced.
"Brexiters might point to the FTSE's rise as a sign of strength but this is very much a story of sterling weakness boosting foreign earnings - which account for around two-thirds to three-quarters of FTSE 100 company revenues," he said.
"Having said that, today's gains largely come from UK-focused stocks like Next, Whitbread, Marks & Spencer, Travis Perkins and Taylor Wimpey."
However, investors may also be celebrating signs from the Bank of England which suggest interest rates could stay lower for longer, after policymaker Michael Saunders indicated that the Bank would not be too fussed if inflation overshoots its target.
Investors will now be looking ahead to end-of-day trade to see if the FTSE 100 can set a new record closing high above 7103.98 points.
Mr Wilson said: "A rally in oil prices and a boost for US equities yesterday has fed through to UK markets and we're now looking to see what the US open has in store - a strong start on Wall Street could help the FTSE close at a new record high today."
