# FTSE 100 ends lower as pound jumps after inflation rises further in June
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-07-14
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: FTSE 100 Falls as Pound Gains Amid Inflation Surge
Meta Description: London's FTSE 100 falls 0.5% as pound strength hits multinationals earnings. Inflation spike and COVID-19 worries add to economic concerns.
URL: https://financedigest.com/ftse-100-ends-lower-as-pound-jumps-after-inflation-rises-further-in-junehtml

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By Shashank Nayar

(Reuters) – London’s FTSE 100 ended lower on Wednesday as a stronger pound weighed on multinationals that earn most of their profits overseas, while a surge in inflation coupled with rising coronavirus cases raised worries of a slower economic reopening.

The blue-chip FTSE 100 index ended 0.5% lower, with real estate stocks falling the most. Heavyweights Unilever, GlaxoSmithKline and Diageo – whose overseas earnings are eroded by a stronger pound – were also among the top drags as sterling rose after [inflation jumped](https://www.financedigest.com/oil-jumps-on-lower-than-expected-us-inflation-data.html "Oil jumps on lower-than-expected US inflation data") to its highest in almost three years.

The domestically focussed mid-cap index fell 0.8%, with travel [stocks down 1.2% over concerns on the effects of a jump](https://www.financedigest.com/dollar-jumps-u-s-stocks-buck-global-rally.html "Dollar jumps, U.S. stocks buck global rally") in COVID-19 cases.

British inflation [rose](https://www.financedigest.com/car-sales-push-irish-retail-sales-sharply-higher-again.html) for the second straight month in June to 2.5%, above the central [bank’s inflation](https://www.financedigest.com/be-really-really-careful-on-inflation-bank-of-englands-haskel.html "Be ‘really, really careful’ on inflation – Bank of England’s Haskel") target, led by higher prices for food, fuel, second-hand cars, clothing, and footwear, official data showed on Wednesday.

While market narratives have swung from hyperinflation and running the [economy hot to a growth scare within just a month](https://www.financedigest.com/uk-factories-suffer-worst-month-since-may-2020-as-economy-stumbles-pmi.html "UK factories suffer worst month since May 2020 as economy stumbles – PMI"), the right position to take is somewhere in between,” said Oliver Brennan, a strategist at TS Lombard.

British house price [inflation](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc.html "UK shop price inflation hits record 8% in January: BRC") gathered more speed in May when prices rose by 10% from the same month in 2020, accelerating from April’s 9.6% annual gain, official data showed.

Shares of homebuilders were up 1.2%, the [highest among](https://www.financedigest.com/sme-inflation-among-the-highest-in-eight-years-but-three-fifths-arent-prepared.html "Sme Inflation Among The Highest In Eight Years – But Three Fifths Aren’t Prepared") other sectors.

The blue-chip [FTSE 100 has gained](https://www.financedigest.com/londons-ftse-100-edges-higher-set-for-fourth-weekly-gain.html "London’s FTSE 100 edges higher, set for fourth weekly gain") nearly 10% so far this year, supported by cheap interest rates, but its pace of growth has slowed since June to trade range-bound near the 7,100 level as higher COVID-19 cases and inflation weighed on investor mood.

Among stocks, AstraZeneca lost 1% and was the second biggest [drag on the FTSE](https://www.financedigest.com/cyclicals-bat-drag-ftse-100-lower-ahead-of-fed-decision.html "Cyclicals, BAT drag FTSE 100 lower ahead of Fed decision") 100\. Britain’s competition regulator cleared its $39 [billion buyout](https://www.financedigest.com/u-s-european-banks-could-lose-over-5-billion-from-risky-buyout-loans.html "U.S., European banks could lose over billion from risky buyout loans") of U.S.-based Alexion.

Barratt Developments gained 2% after it forecast 2021 [profit to be marginally](https://www.financedigest.com/inflation-boosts-jeronimo-martins-q4-profit-but-dents-margins.html "Inflation boosts Jeronimo Martins’ Q4 profit but dents margins") above the top end of market expectations.

Snack food [firm SSP Group tumbled 4.3% on its chief executive officer’s plans](https://www.financedigest.com/uk-firms-plan-biggest-pay-rises-since-2012-to-fill-staff-gaps.html "UK firms plan biggest pay rises since 2012 to fill staff gaps") to step down from his role at the end of 2021 to join a private equity-backed business.

(Reporting by Shashank Nayar in Bengaluru; Editing by Subhranshu Sahu, Uttaresh.V and Alex Richardson)


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