Sterling hits its highest since the Brexit vote as FTSE 100 smashes records

The pound partied hard this afternoon following reports of good news for Brexit negotiators – as the FTSE 100 ended the week by breaking another record

Sterling began the evening more than one per cent higher against the dollar, while it mustered a 0.2 per cent rise against the euro as reports the Spanish and the Dutch were seeking a soft Brexit followed the news Angela Merkel's ruling CDU party has reached the next stage in coalition talks.

The pound climbed to $1.3680 against the dollar, its highest since the Brexit vote, and €1.1281 against the dollar.

Read more: PM rules out payment for City's single market access after Brexit

FTSE 100

Meanwhile, the FTSE 100 steamed to a record finish at 7,778.64 points, having touched an intraday high of 7,790.9 points earlier in the afternoon.

The index was carried higher by engineering firm GKN, which shot up more than 28 per cent after it said it had received an unsolicited takeover offer from Melrose Industries.

Smiths Group and Rolls-Royce also climbed on the news, rising 6.8 per cent and three per cent respectively.

"Currencies are all the rage this afternoon as the euro and sterling both gain on hopes of political developments in two key stories, namely the German coalition talks and the next round of Brexit negotiations," said Chris Beauchamp, chief market analyst at IG.

"Even with renewed sterling strength the FTSE 100 has been able to clamber to a new high. Bullishness is rampant among investors, who appear to be tripping over themselves in a race to buy US and UK equities. Europe remains the unloved area, however, as markets begin to fret about a potential ramp-up in monetary tightening by the ECB."

Read more: Bookies have slashed the odds of another referendum after Farage's comments

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