FTSE 100 Hits Record High

The FTSE 100, comprising the UK's top publicly traded companies, has shattered its closing price record. This surge is primarily attributed to a softening pound, making exports more attractive and boosting overseas earnings for index constituents. Additionally, a de-escalation of Middle East tensions has contributed to the positive market sentiment.

"Many FTSE companies generate substantial dollar-denominated revenue. Consequently, a weaker pound amplifies their sterling-reported profits," explained wealth manager Rachel Winter of Killik & Co. The pound dipped 0.2% against the dollar, reaching a five-month low.

Senior market analyst Axel Rudolph of IG cited the easing Middle East situation as a further catalyst for the FTSE 100's record-breaking performance.

The index has steadily climbed in recent weeks amid expectations of interest rate cuts by the Bank of England as inflation recedes towards the 2% target. Lower rates stimulate economic activity through cheaper borrowing. This would mark the first rate reduction since March 2020.

"Anticipation of UK rate cuts ahead of similar US Federal Reserve action has bolstered the FTSE," noted investment analyst Dan Coatsworth of AJ Bell.  Marks & Spencer, Next, and Sainsbury's benefited particularly from positive broker recommendations, receiving 'buy' upgrades within a broader retail sector review.