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Pound rises as CBI upgrades UK growth predictions

by Daniel Grote on May 12, 2014 at 10:48

Pound rises as CBI upgrades UK growth predictions

The pound has jumped as the Confederation of British Industry braised its forecasts for UK economic growth this year, while a rally in miners has led the FTSE 100 higher.

Sterling rose 0.26% to $1.6892 after the CBI raised its forecasts for economic growth to 3% for 2014, up from its previous 2.6% estimate. It also upped its forecasts for 2015 growth from 2.5% to 2.7%.

'The recovery is advancing after a strong performance in the first quarter of 2014,' said CBI director general John Cridland. 'Prospects are bright and we expect the recovery to broaden out this year, with greater support from business investment in particular.'

Miners led the FTSE 100 higher as a rise in metal prices and an upgrade from analysts at JPMorgan provided a boost to the sector.

The FTSE 100 rose 16 points, or 0.2%, to 6,830 with miners Rio Tinto (RIO) up 91.5p, or 2.9%, to £32.81, BHP Billiton (BLT) adding 36.5p, or 1.9%, to £19.33 and Antofagasta (ANTO) rising 17p, or 2.2%, to 785.9p. They were helped by a jump in the nickel and copper prices, and a note from analysts at JPMorgan raising the mining sector from 'underweight' to overweight', pointing to signs of a resurgent activity and cost-cutting.

The CBI upgrade and mining optimism helped to offset worries over the Ukraine, after a referendum on autonomy for the east of the country went ahead over the weekend, with pro-Russia separatists claiming victory in the vote.

Sage (SGE) was also amongst the risers, as it pared some of the losses incurred last week after a downbeat trading update and the announcement of the departure of chief executive Guy Berruyer. The software group rose 8.7p, or 2.2% to 405p.

Petrofac (PFC) also recovered some ground after the battering its shares took on Friday following a profit warning. The energy services group rose 35p, or 3% to £12.11.

BSkyB (BSY) was the biggest faller amongst the blue chips, shedding 22.5p, or 2.5% to 867.9p after news that media mogul Rupert Murdoch is looking to unite his TV businesses Sky Italia, Sky Deutschland and BSkyB under one brand.

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