UK's FTSE 100 hits record peak on weaker pound; Associated British Foods surges

Surging commodity prices, a falling pound as well as gains in defence have powered the FTSE 100 higher this year as investors took advantage of cheaper valuations in British equities compared to other global .

"It's predominantly down to the weakness of the pound against the dollar in the past week," Russ Mould, investment director at AJ Bell said.

"It's obviously taken a long time to get to its all-time high compared to other markets. The FTSE 100 has underperformed for a very long time and when markets underperform it can mean undervalued."

The pound steadied after touching its lowest in over five-months on Monday as traders priced in early interest rate cuts from the of England. When the value of the pound decreases, it often benefits stocks in the FTSE 100 index as most of their earnings come from overseas.

Investors will closely watch earnings from U.S. tech firms as well as data to gauge if there is room for further market gains.

Associated British Foods jumped 9.4% to the top of the FTSE 100 after the Primark owner forecast "significant growth" in full-year profit as it reported a 39% jump in the first half.

Other retailers such as J Sainsbury and Tesco rose more than 1% each, while Ocado added 5% after data showed UK grocery price inflation fell for the 14th month in a row in April, partly driven by an increase in supermarkets' promotional activity.

JD Sports Fashion jumped 7.1% after the sportswear retailer proposed to buy U.S. athletic-fashion retailer Hibbett Inc for about $1.08 billion.

The mid-cap FTSE 250 was up 0.5%, hovering near the 20,000 mark.

Petershill Partners gained 5.8% after the investment firm proposed a tender offer to return up to $100 million to shareholders at a price per share of 2.14 pounds.