FTSE 100 breaches 8,000 for first time

The top-flight index hit a fresh intraday high of 8,003.65 earlier, with sterling down 1.3% against the dollar at 1.2018 after data from the Office for National Statistics showed that consumer price inflation eased more than expected in January.

The annual rate of CPI fell to 10.1.% in January from 10.5% in December, coming in below analysts' expectations of 10.3%.

A weaker pound tends to benefit the FTSE 100 as around 70% of its constituents derive most of their earnings from overseas.

Laith Khalaf, head of investment analysis at AJ Bell, said: "It’s redemption day for the FTSE 100 as it breached the 8,000 mark after a long spell in the wilderness. The 8,000 level is a purely psychological milestone, but investors in the UK stock market will nonetheless be happily counting their coffers after a year in which it has been one of the best performing major markets. Pension and ISA valuations will be looking pretty healthy thanks to the performance of the FTSE 100 and indeed the continued resurgence in the US stock market since the turn of the year.

"This silver lining isn’t entirely shorn of a cloud however, because much of the success of the UK stock market over the last year can be traced back to Russia’s invasion of Ukraine. This helped buoy the share prices of the oil and gas sector, and the financial sector too, as the fight against increased inflation has meant interest rates have also had to rise, boosting bank reserves.

"A weak pound has also helped propel the Footsie upwards, thanks to all the overseas earnings made by the companies within it. It’s notable that the last calendar year in which the FTSE 100 outperformed the S&P 500 was in 2016, when the pound also took a hammering following the EU referendum. But while a weak pound may be a shot in the arm for the UK stock market, it is also a vote of no confidence in the UK economy."