The FTSE 100 index has gone above its all-time intra-day high, boosted by a sharp decline in the value of the pound.
The pound has fallen to its weakest level since the financial crisis in early trading on Tuesday as worries persists over the UK’s economic prospects outside the EU.
This sent the FTSE 100 index of top blue chip shares through its intra-day record high.
The index hit 7,129.21 - up 0.45 per cent or 31.68 points.
Its previous intra-day record was 7,122.74 which it reached on 27 April 2015.
The index has been boosted by retailers such as Next and Marks & Spencer, up 4.2 per cent and 3.1 per cent, respectively.
The smaller FTSE 250 index, or the 250 biggest companies in the UK, has gained 0.7 per cent - close to the record high struck last week.
The decline of the pound has boosted the FTSE 100 as many companies make a significant proportion of their profits abroad.
A weaker pound makes UK exports more competitive and some companies have reported a pick-up in overseas sales since the British vote to leave the EU in June caused sterling to tumble.
Neil Wilson at ETX Capital, said: "Brexiters might point to the FTSE’s rise as a sign of strength but this is very much a story of sterling weakness boosting foreign earnings – which account for around two-thirds to three-quarters of FTSE 100 company revenues."
Sterling was down 0.61 per cent at $1.2290 against the dollar in early trading on Tuesday - this would be a new 31-year low for the currency, if you ignored the flash crash that sent sterling tumbling by more than 6 per cent on Friday.
It was still trading below $1.23 at 1.2255 at 12:37 pm.
It dropped below €1.11 against the euro, adding to predictions from some analysts that it could reach parity in the next 12 months.
Sterling has now fallen about 18 per cent against the dollar since the referendum to lows not seen since 1985.
The currency has been this year’s worst performer among 32 major currencies tracked by Bloomberg.
Chris Beauchamp, Chief Market Analyst at IG, said the weak pound is “working its magic” on share prices again.
He said: "UK investors will once again be cheering the impact of a falling pound, as the drop in sterling once again works its magic on the FTSE 100."
Sterling has been under pressure for more than a week as Prime ministers Theresa May at the Conservative Party conference hinted she would opt for a “hard Brexit” settlement that sacrifices access to the single market and prioritises stricter immigration controls.
Brexit Secretary David Davis dismissed calls for him and his fellow ministers to be “careful with their words” to prevent further volatility and sharp declines.
Bank of England policymaker Michael Saunders said on Tuesday he would not be surprised if the pound fell further.
HSBC analysts predicted the pound will fall to $1.10 against the dollar and hit parity against the euro by the end of 2017.
