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Pound hobbles FTSE as dollar drops on Tillerson exit

Pound hobbles FTSE as dollar drops on Tillerson exit
 

The FTSE 100 has fallen, weighed down by the pound's jump against the dollar, as the US currency fell on news president Donald Trump had sacked secretary of state Rex Tillerson.

The UK blue-chip index fell 52 points, or 0.7%, to 7,163, as the pound rose half a cent against the dollar to trade at $1.396. 

The greenback fell on news of Tillerson's sacking together with US inflation figures that were in line with expectations, calming fears over faster interest rate rises by the Federal Reserve.

Trump announced Tillerson's departure on Twitter, saying he would be replaced as secretary of state by Mike Pompeo, director of the CIA.

'Many analysts have suggested in the last week that political risks have largely subsided in the US as Trump has backed away from sweeping steel and aluminium tariffs, but today's event goes to show how quickly things can change in Washington' said Hamish Muress, currency analyst at OFX.

'US dollar weakness continues to endure and even the prospect of three rate hikes this year from the Federal Reserve won;t change this.'

The pound was also buoyed by better-than-expected growth figures for the UK economy, unveiled by chancellor Philip Hammond in his Spring Statement. 

The Office for Budget Responsibility now expects the UK economy to grow 1.5% in 2018, up from their forecast of 1.4% growth made in November last year. 

The pound's jump weighed on the FTSE 100, whose stocks rely on overseas markets for around three-quarters of their earnings.

The big mover of the day was Greencore (GNC), down 28.2% at 131p and falling to the bottom of the FTSE 250 as the food manufacturer warned 2018 profits would be lower than expected. 

Computacenter (CCC) joined it at the bottom of the FTSE 250, down 7.8% at £10.40 after the IT company warned of a 'challenging' 2018.

TP Icap (TCAPI) fell 10.1% to 485p as the interdealer broker warned of costs this year related to making the group 'ready for the impact of Brexit'.

On the Alternative Investment Market, Fevertree (FEVR) fell 3.9% to £25.88 as the mixer drinks maker reported a 64% jump in earnings, but failed to keep up its habit of beating expectations.

'There has scarcely been a time when the company hasn't beaten market expectations with its financial results and trading updates, events which have prompted analysts to regularly upgrade their earnings forecasts,' said Russ Mould, AJ Bell investment director.

'So when it only meets and not beats expectations, you know the stock market is going to stamp and shout in disgust.'

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