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Soaring pound and dollar slump send FTSE red

Soaring pound and dollar slump send FTSE red

Update: The pound has surged to a fresh post-Brexit high against the dollar, driven by the solid UK jobs data and fresh weakness for the greenback on comments from US Treasury secretary Steven Mnuchin.

Sterling jumped 1.5% against the dollar to $1.42, its highest level since last year's Brexit vote sent the currency tumbling.

The pound was buoyed on data showing a 102,000 increase in the number of people in employment in the three months to November. Wage growth was steady at 2.5% while pay excluding bonuses rose 2.4%, ahead of the 2.3% forecast.

'Today's jobs numbers once again strongly suggest that the UK economy is on a firmer footing than many had anticipated following the European Union referendum vote,' said James Athey, senior investment manager at Aberdeen Standard Investments.

'The combination of such low unemployment, OK wage data and a booming global economy will embolden the Bank of England to continue to raise rates steadily.'

The pound was given a further boost against the dollar by comments Mnuchin's claim at the World Economic Forum in Davos that a weak dollar was positive for the US.

'Where it is in the short term is not a concern for us at all,' he said. 'A weaker dollar is good for us as it relates to trade and opportunities'.

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

The UK blue-chip index was down 67 points, or 0.9%, at 7,664. Sage (SGE) was the heaviest faller, down 6.5% at 768.2p on disappointing first quarter results. 

Numis analyst David Toms said the 6.3% revenue growth over the period was 'a bit soft'. 'The share price reaction suggests we were not alone in expecting more,' he said.

Sage is a long-standing favourite of Citywire AAA-rated fund manager Terry Smith and AA-rated Nick Train.

Bucking the losses was London Stock Exchange (LSE), up 5% at £39.88 after hedge fund TCI predicted a £15 billion bid for the company, according to Sky News.

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