The pound was one of the worst performing currencies after the Bank of England's latest economic forecasts disappointed investors who were hoping for a more hawkish stance from policy makers.
Sterling began its descent at midday following the release of the central bank's February Inflation Report and interest rate decision.
By late afternoon, the pound was down around 1% against the US dollar at 1.253 and dropped 1.2% against the euro to 1.160.
It boosted London's blue chip index, which rose nearly 0.5% or 33.1 points to end the day at 7,140.75.
Multinational firms listed on the FTSE 100 benefit when foreign currencies are stronger than the pound.
The Bank of England hiked UK growth forecasts for 2017 and the next two years on Thursday, but left inflation forecasts more or less unchanged.
Michael Hewson, chief market analyst at CMC Markets UK said: "This was a significant surprise as it had been expected that the sharp rise in prices seen in recent months, and still to be felt, would be reflected in the latest inflation forecasts, but the report indicated that the MPC (Monetary Policy Committee) expected CPI (Consumer Price Index inflation) to peak at 2.8% in the first half of next year.
"This seems remarkably optimistic, given that the inflationary pressures being seen domestically are also being seen in the US and Europe."
Rate setters at the Bank unanimously voted to keep rates on hold at 0.25%.
Across Europe, the French Cac 40 closed flat while the German Dax fell nearly 0.3%
In oil markets, Brent crude prices rose more than 0.7% to 56.95 US dollars per barrel (£45.42) as enthusiasm over Opec supply cuts gripped markets, despite recent data showing US production was on the rise.
In UK stocks, Royal Dutch Shell's 'B' shares rose 35p to 2,258p despite the oil giant posting an 8% drop in profits to £2.7 billion.
Investors were instead cheering news of strong cash flow, debt reduction and further strides in its 30 billion US dollar (£23.9 billion) sell-off programme.
Reckitt Benckiser soared 279p to 7,109p after the Cillit Bang and Dettol firm confirmed it was in advanced talks over a 16.7 billion US dollar (£13.2 billion) deal to buy US baby formula maker Mead Johnson.
Sports Direct shares rose 3.5p to 301.9p following news that the company bought an 11% stake in French Connection.
Shares in Vodafone rose 0.2p to 193.2p as the mobile giant said it would meet the lower end of its full-year earnings outlook amid mounting competition in the UK and India.
Thomas Cook shares rose 0.5p to 88.95p, and TUI AG rose 9p to 1,162p, despite news that the European Commission has launched an investigation into the travel firms claims they blocked some customers from getting the cheapest prices.
The biggest risers on the FTSE 100 were Smurfit Kappa Group up 94p to 2,162p, Reckitt Benckiser Group up 279p to 7,109p, Randgold Resources up 200p to 6,815p, and Compass Group up 42p to 1,439p.
The biggest fallers on the FTSE 100 were Worldpay down 7.6p to 280.1p, Capita down 12.1p to 486.9p, 3I Group down 15.5p to 692.5p, and Johnson Matthew down 42p to 3,240p.