The FTSE 100 closed higher, buoyed by positive global market sentiment following comments from Jerome Powell.
The Federal Reserve Chair signalled the possibility of interest rate cuts, boosting investor confidence that the economy may achieve a “soft landing.” The FTSE 100 gained 0.5%, with JD Sports leading the charge with a 5.2% increase, followed by retailer B&M, which rose 3.1%.
On the downside, aerospace company Melrose Industries saw a decline of 7.1%, while accounting software producer Sage fell 2%.
The FTSE 250 also posted gains, rising 0.4%. Tech venture capital firm Molten Ventures was the top performer, up 3.7%, with property company Hammerson following closely at 3.4%. Engineering firm Renishaw had the biggest decline, down 3%, with recruiter Hayes dropping 2.2%.
Sterling climbed to its highest level in over two years following Jerome Powell’s signal on interest rates.
Sterling surged to its highest level in over two years, while the dollar declined this afternoon following Federal Reserve Chairman Jerome Powell’s clear signal that a long-anticipated US interest rate cut is likely next month.
In his keynote address at the Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming, Powell indicated that “the time has come for policy to adjust,” citing reduced inflation risks and heightened employment concerns.
Traders on Friday continued to anticipate a 0.25 percentage point rate cut at the Fed’s September meeting. However, Powell’s comments shifted expectations, raising the odds of a larger 0.50 percentage point cut to about one-in-three, up from just over one-in-four.
Sterling rose to a more than two-year high against the dollar, reaching $1.3197, its highest since late March 2022, and surpassing a previous 13-month high of $1.3144. This rally was supported by a survey showing British consumer confidence held steady at its highest level in nearly three years, reflecting broader positive trends in the UK economy.
