Pound pressured by weak retail data, lifting FTSE 100

The FTSE 100 rose 0.6% on Friday to extend its climb for a second day, buoyed by a weaker pound despite still facing a weekly loss. The pound came under pressure after much worse-than-expected retail sales data for December raised expectations that the Bank of England may cut interest rates sooner.

Retail sales volumes plunged 3.2% between November and December as shoppers purchased Christmas gifts earlier than usual. This was far below economists’ forecasts for a 0.5% drop and marked the largest decline in almost three years, heightening concerns the economy may have entered a recession in the fourth quarter.

Analysts said the data makes a rate cut from the central bank more likely in the second quarter of 2024 as it battles softening growth and inflation.

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Domestically oriented stocks also rose, with the FTSE 250 index adding 0.4% despite facing a weekly decline. Advertising firm 4imprint Group jumped 11.5% after raising its profit outlook, while homebuilder Persimmon climbed 2.3% on an upgrade from Morgan Stanley.

Wincanton rallied 47.3% after CEVA Logistics, owned by French shipping firm CMA CGM, offered to acquire the British logistics company in a £700 million cash deal.