Firm pound keeps UK’s FTSE 100 range-bound; mining stocks rise

UK’s FTSE 100 was subdued on Tuesday, as a strengthening pound pressured the exporter-heavy index, while mining stocks shined on higher metal prices.

The blue-chip FTSE 100 was flat at 7,272.87 points, while the more domestically-focussed FTSE 250 midcap index added 0.6%

Sterling gained 0.1% after official figures showed British wages excluding bonuses were 7.3% higher in the three months to May than a year earlier, matching the highest growth on record, adding more pressure to the Bank of England’s inflation woes.

However, there were also some signs of a loosening in the labour market as the unemployment rate unexpectedly rose to 4.0% from 3.8%.

“Inflation’s high, interest rates are higher to combat inflation, but that affects the natural consumer in turn,” said Christopher Peters, trading floor manager at Accendo Markets.

“That would explain why wages have gone up as more of a necessity than a want.”

A British Retail Consortium survey showed retail spending increased by 4.9% in annual terms in June – roughly in line with its average this year.

Industrial metal miners were amongst the top gainers, up 1.2% as most base metal prices rose on a weaker dollar. Precious metal miners also gained 1.2%. [MET/L] [GOL/]

Also helping the China-exposed miners, China’s central bank extended until the end of 2024 some policies in a November rescue package to shore up its embattled real estate sector.

British Land rose 2.4% after the commercial property firm said it still expects strong operational momentum despite macroeconomic uncertainty.

Dowlais Group slipped 6.8% after Citigroup (NYSE:C) initiated coverage on the specialist engineering group with a “sell” rating.

Investor focus would remain on crucial U.S. inflation data due on Wednesday to assess the state of the world’s largest economy and where the Federal Reserve stands on monetary policy tightening.

Overnight, Fed officials said the central bank will likely need to raise interest rates further, but the end to its current tightening cycle is getting close.