The pound faltered today following Boris Johnson’s leadership victory as the City worried about the outlook for Britain’s economy – and feared the turbulence ahead.

With a possible recession and inflation heading towards 10%, the Prime Minister’s relationship with the Square Mile and the wider business community is strained.

The pound fell 0.7% to $1.243 against the dollar. It is down from $1.42 a year ago. It also fell half a cent against the euro.

The city is worried about what the Prime Minister could do to build support with the public.

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FTSE 100 stable, Biffa jumps 28%

The FTSE 100 index is close to its opening mark at 7600, with 1% gains for heavy mining stocks Rio Tinto and Anglo American offset by weakness in the retail sector.

B&Q owner Kingfisher fell 2% and Ocado 1.5%, while financial stocks St James’s Place, Abrdn and Hargreaves Lansdown also fell.

The FTSE 250 index weakened 59.92 points to 20,446.88, led by National Express, as shares fell 5% following a trade update.

Recycling firm Biffa jumped 28% or 92.8p to 417.8p as it revealed it had received a £1.4bn takeover approach from a US private equity firm.

Retail sales fall ahead of Jubilee boost

According to the British Retail Consortium (BRC), May retail sales fell 1.5% on a comparable annual basis as the cost of living crisis hampered demand.

However, the Jubilee weekend was a little brighter, as the BRC also reported that UK attendance was up 6.9% from the May average.

Myron Jobson, Personal Finance Analyst at Interactive Investor, said: “The hope now for retailers is that this will create momentum, as well as the summer feel-good factor, to support sales despite the storm. raging on the cost of living.

“But the outlook for consumer confidence remains bleak with inflation set to hit double digits, while the energy price cap review in the autumn is expected to add an extra £800 a year to the typical energy bill.”

Inflation jitters weaken markets

European markets are facing a weaker start as fears over the possible course of interest rates fueled investor caution.

The selling pressure follows a surge in the US 10-year bond yield, which rose above 3% towards its 2018 high ahead of Friday’s consumer price index release.

A better-than-expected inflation figure of 8.3% could end Wall Street’s hopes that US policymakers could suspend interest rate hikes in the fall.

Concerns weren’t helped by overnight developments after Australia’s central bank announced a bigger-than-expected 0.5% hike in its cash rate to 0.85%.

He cited the strength of the labor market and warned that further monetary policy tightening was on the cards after today’s first consecutive rise in 12 years.

The rise in the US bond yield put pressure on Wall Street stocks towards the end of yesterday’s session, meaning the FTSE 100 index is set to open 23 points lower at 7,585.

There was little reaction from the pound to the outcome of yesterday’s vote of confidence in Prime Minister Boris Johnson.

Michael Hewson, chief market analyst at CMC Markets, said: “Markets are most concerned about the direction of the UK economy and the Bank of England’s attempts to address it.”