London’s FTSE 100 drifted lower, pressured by a softening pound and renewed U.S. tariff anxieties. Benchmark index fell around 0.2% as President Trump announced potential 30% tariffs on EU and UK goods, effective August 1. The currency dropped to $1.36, reaching near two-week lows.
Export-heavy sectors such as automotive, luxury brands, and aerospace faced the brunt of investor concern, with British multinational profits threatened by higher U.S. duties and a stronger pound against global peers. The chemical and materials sectors also saw red as input costs and cross-border pricing risks weighed.
Conversely, defensive and resource stocks helped cushion the decline. Precious metal miners gained as gold prices surged on safe-haven flows tied to macro uncertainty. Utility and consumer staple companies held relatively steady as investors sought market stability amid geopolitical unease.
The Bank of England’s cautious approach further shaped market dynamics. Governor Andrew Bailey’s recent comments, indicating that rate decisions will depend on labor market developments, offered minimal relief for sterling—a weaker currency may complicate inflation control. Still, rate cuts remain distant unless jobs data deteriorates significantly.
As earnings season approaches, market watchers are eyeing reports from large FTSE-listed firms, including HSBC, BP, and Diageo. Preliminary outlooks may reveal impacts from trade costs or currency translation effects, which could influence sentiment next week.
The FTSE’s marginal dip reflects market nervousness over trade policy and currency headwinds. While exporters are under pressure, resource and defensive sectors offer resilience. As businesses navigate macro risk, investors may find safety in diversified portfolios that include defensive assets and hedged positions.