FTSE index closes at record high as pound falls

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FTSE index closes at record high as pound falls

FTSE 100 stock index closed at a record high and was lifted by investors who said that a weak pound will help UK firms abroad and that the worst of the cost of living crisis has passed.

The London Stock Exchange has many firms with big footprints overseas, so that is a reason that the index has a large footprint. A weak pound makes goods they export cheaper for foreign buyers and helps inflate the value of business done elsewhere.

The pound falls against the dollar, so the bulk of the money earned by companies on the index comes from overseas.

Look at the value of the companies on the index in dollars, and it looks like a bargain for some investors compared to many other stock markets.

There are signs that price rises around the globe have peaked, so could be slowing soon - and so interest rates may soon do so as well, making borrowing cheaper and helping money flow more freely through the economy.

The renewed momentum in markets may be welcomed by investors - including holders of pension funds. We're only five weeks into what could be another eventful year.

A lot of the economic news is bad, but markets are saying that was priced in during 2022's heavy mid-year falls, and the bad news is known, according to AJ Bell markets analyst Russ Mould. The Bank of England spokesman Andrew Bailey said that the recession in the UK was likely to be shorter and less severe than previously thought.