The pound regained some poise on Friday afternoon but remained in precarious territory, after falling below the $1.11 mark in afternoon trade.
The pound was quoted at $1.1203 at the close on Friday, down versus $1.1294 at the London equities close on Thursday. It hit an intraday low of $1.1063 not long after midday.
Sterling was hurt by continued political uncertainty. Speculation about who will join Penny Mordaunt in throwing their hats in the ring in the race for Number 10 continues. Boris Johnson and Rishi Sunak, one-time neighbours at Number 10 and 11 Downing Street - but now bitter rivals - have pockets of support from Tory MPs.
Adding to the pressure on sterling, disappointing UK retail sales data showed a bigger-than-expected decline in September, according to figures from the Office for National Statistics.
Retail sales fell 6.9% annually in September, with the decline accelerating from a 5.6% fall in August. It also was worse than FXStreet-cited market consensus, which had expected a fall of just 5%.
The pound had initially found some support on Thursday after Liz Truss called an end to her disastrous tenure as prime minister - poking above $1.13 - but has since been dragged lower.
The FTSE 100 index closed up 25.82 points, or 0.4%, at 6,969.73 - closing out the week up 1.6%.
The FTSE 250 lost 182.38 points, or 1.1%, at 17,206.55, but still managed to gain 1.0% this week, and the AIM All-Share ended down 1.04 points, or 0.1% at 785.40 - but advanced 0.8% over the past five days.
The Cboe UK 100 closed up 0.4% at 696.31, the Cboe UK 250 ended down 1.0% at 14,694.15, and the Cboe Small Companies lost 0.3% at 12,240.46.
In European equities on Friday, the CAC 40 in Paris lost 0.9%, while the DAX 40 in Frankfurt gave back 0.3%.
The Tories have begun to declare their allegiances in the party’s second leadership contest of the year as speculation mounts over who will seek to replace Truss at the helm of the party.
Supporters of Johnson are backing the former prime minister to make an extraordinary political comeback, while ex-chancellor Sunak and Commons Leader Mordaunt also have the public support of several MPs.
Mordaunt become the first to declare her candidacy, with a pledge to re-unite the bitterly divided party.
The leader of the House - who finished third in the last leadership election - said she had been encouraged by the support she had received from fellow Conservative MPs.
There has also been no declaration yet from Sunak, who did not answer questions from reporters as he left his home on Friday morning.
Whoever does win will face an immediate test, choosing whether to go ahead with the planned Halloween statement setting out how the government intends to get the public finances back on track, Downing Street has said.
Work is continuing in Whitehall, led by Chancellor Jeremy Hunt, in preparation for the medium-term fiscal plan to be announced on October 31 along with an updated set of economic forecasts from the Office for Budget Responsibility.
However, a Number 10 spokeswoman said it would be up to Liz Truss’s successor to decide whether to proceed with that approach and with the same timetable.
In London, blue chip miners helped push FTSE 100 higher. Glencore gained 3.6%, Anglo American 3.1%, Antofagasta 2.7%, and Rio Tinto added 1.6%.
Retailers, however, were showing weakness after the disappointing UK retail sales data. A profit warning from Adidas did nothing to help the mood either.
JD Sports closed down 6.1%, Frasers 4.0%, Burberry 2.2%, and Next shed 2.9%.
On Thursday, Adidas lowered annual guidance as it struggles with ‘deteriorating traffic’ in China and high inventory levels.
The sports apparel maker said it has needed to turn to ‘higher clearance activity’ to try and shift stock.
It lost 9.0% in Frankfurt.
Deliveroo gained 3.6%.
The London-based online food delivery service said gross transaction values rose 8.3% annually in the third quarter to £1.70 billion from £1.57 billion, though orders fell by 1.1% to 72.8 million from £73.6 million.
Deliveroo said the decline in orders was due to a difficult consumer environment. With economic data on Friday showing that UK consumer confidence remains near record lows, this seems unlikely to change anytime soon.
InterContinental Hotels gave back 2.2% but reported strong revenue growth in the third quarter to September 30, saying that high global employment levels are boosting occupancy levels.
Revenue per available room, or RevPAR, rose 28% year-on-year and now exceeds its pre-pandemic level, being up 2.7% on the third quarter of 2019.
In the third quarter of 2022, the average daily rate increased by 13% compared to a year ago and was up 11% on 2019.
Chief Financial Officer & Head of Strategy Paul Edgecliffe-Johnson will leave the company in six months time to become CFO of Flutter Entertainment in the first half of 2023.
IHG has started the process of finding a new CFO.
The euro stood at $0.9802 Friday evening, down against $0.9822 at the close on Thursday.
Against the yen, the dollar was trading at JP¥148.03, compared to JP¥149.77 late Thursday. The yen was staging a fightback after the open on Wall Street, after nearly hitting JP¥152 during the Asia session.
Stocks in New York opened higher on Friday, with the DJIA up 1.1%, the S&P 500 index up 0.9%, and the Nasdaq Composite was 0.6% higher.
Brent oil was quoted at $92.84 a barrel late Friday, down from $93.29 late Thursday. Gold was quoted at $1,643.70 an ounce Friday, up against $1,641.90 from Thursday.
In the international economics events calendar next week, Monday will be dominated by a slew of composite PMIs, with Japan overnight followed by Germany, eurozone and the UK in the morning then the US in the afternoon. A quiet Tuesday will be headlined by a US house price index.
On Wednesday, there is Chinese GDP, retail sales and industrial production overnight, then on Thursday attention will be on the European Central Bank interest rate decision at 1315 BST. Friday will be headlined by a Bank of Japan rate decision.
In the local corporate calendar on Monday, there are half-year results from Dr Martens, while education publishing firm Pearson will issue a third quarter update.
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