Manufacturing figures hit pound, but FTSE 100 soars

The pound lost ground on Monday after Britain’s manufacturing output undershot expectations, while shares in London were trading higher.

Sterling dipped 0.41% against the US dollar to 1.264.

It followed the release of the latest IHS Markit/CIPS UK manufacturing purchasing managers’ index (PMI), which showed a reading of 48 last month, down from 49.4 in May. It was the lowest reading since February 2013.

Howard Archer, chief economic adviser to the EY Item Club, said the latest figures had wider implications for the health of Britain’s economy.

“The clear sharp slowdown in manufacturing output in the second quarter is a key factor in our belief that the economy likely suffered modest contraction,” he said.

However, the pound was higher on the euro, climbing 0.38% to 1.185, as the eurozone reported similarly gloomy manufacturing figures.

The pound’s weakness on the dollar helped to boost the FTSE 100, which was already in a good mood due to perceived progress on the trading relationship between the US and China.

The blue-chip index gained 71.87 points, or 0.97%, to close at 7,497.5.

The German Dax was up 0.99% while the French Cac climbed 0.52%.

Fiona Cincotta, senior market analyst at City Index, said the meeting between US leader Donald Trump and Chinese President Xi Jinping had boosted sentiment.

“For the time being the existing import tariffs will remain in place, but the markets will live off the hope that the resumption of the discussions between US and Chinese trade representatives will help lift those sooner rather than later.”

In company news, Aston Martin’s biggest investor said it was looking to boost its stake by splashing out £68 million on another 3% holding in the luxury car-maker.

Shares in the company were up 20p to 1,025p.

Advertising and marketing giant WPP confirmed the sale of its 25% stake in sports marketing agency Chime for an initial £54.4 million.

The firm’s share price rose 21.8p to 1,012p.

Meanwhile, shares in Total Film owner Future Plc jumped 67p to 1,036p after upping its expectations for the year. The company also announced the move of its finance chief to the new role of chief strategy officer.

On the oil markets, prices were higher in part due to the more positive trade mood. They were also boosted by an expected agreement between oil-producing countries to extend curbs on production.

A barrel of Brent Crude oil was trading at 65.02 US dollars, up 0.96%.

Michael Hewson, chief market analyst at CMC Markets UK, said: “The danger of this move higher in prices, in a weakening global economy could be to weaken demand as higher prices crimp consumer incomes.”

The biggest risers on the FTSE 100 were NMC Health up 115p to 2,518p, Flutter Entertainment up 244p to 6,172p, British American Tobacco up 112.5p to 2,861.5p and Ocado Group up 43.5p to 1,210.5p.

The biggest fallers on the FTSE 100 were Fresnillo down 17.4p to 852.8p, Associated British Foods down 38p to 2,425p, Vodafone Group down 1.38p to 127.94p, Next down 56p to 5,470p.