“The relative weakness of the pound will remain a tailwind for the FTSE 100”

Garry White, Chief Investment Commentator at wealth manager Charles Stanley, said: “In the coming months, Donald Trump is likely to help the FTSE 100 hit a series of new all-time highs. The FTSE 100 index reached a record ahead of the Bank of England’s widely expected decision to cut interest rates by 25 basis points today. The continuing divergence of major central bank policy in coming months means there could be many more such records ahead. A weak pound is positive for Britain’s blue-chip index, as the majority of earnings generated by constituent companies are generated abroad. These earnings are flattered once translated into sterling.

“Bank of England policy makers said today that they expect to make monetary policy less restrictive as the year progresses – and cut interest rates further. This means the Bank of England and European Central Bank are relatively dovish, as the US Federal Reserve is perceived to be more hawkish. Fewer interest-rate cuts are expected across the Atlantic in 2025, as many of Donald Trump’s policies appear to be inflationary. These include tariffs, which are likely to be paid for by consumers, the deportation of undocumented migrants, which will increase the scarcity of low-skilled workers, and the extension of tax cuts for businesses and individuals. The dollar has already seen a period of relative strength, but central bank policies are likely to continue to provide support. The currency’s safe-haven status amid tariff confusion means dollar strength is likely to persist in the early part of 2025. The relative weakness of the pound will therefore remain a tailwind for the FTSE 100.”