Sterling rose and the FTSE 100 was left nursing heavy losses as political developments on both sides of the Atlantic played their part in markets on Tuesday.
News that Donald Trump had sacked his secretary of state Rex Tillerson, along with US inflation data, sent the dollar down sharply against the pound, leaving sterling at 1.398 US dollars, up 0.5 per cent on the day.
Turmoil in the White House, which has increased markedly since Mr Trump came to power, has tended to have a negative impact on the greenback.
Connor Campbell, financial analyst at Spreadex, said: ‘Both the dollar and the Dow Jones seemed a tad shaken by the firing of Tillerson, the latest in a string of high-profile departures from the White House.’
Mr Tillerson’s dismissal comes after he spoke with Foreign Secretary Boris Johnson about the nerve gas attack in Salisbury which targeted a former Russian spy and his daughter.
Providing further momentum to the pound were figures from the Office for Budget Responsibility, which upgraded growth projections and forecast a fall in Government borrowing and national debt over the coming years.
It came alongside Philip Hammond’s Spring Statement, in which the Chancellor hinted he will turn on the spending tap following years of austerity.
Against the euro, the pound was also in positive territory, up marginally to 1.127 euro.
But sterling’s gain led to pain for the FTSE 100, which went in the opposite direction, tumbling 1.05 per cent, or 75.98 points, to 7138.78.