Home news keeps FTSE in narrow range

The FTSE notched lower on opening, pulled down by travel group TUI and its revised earnings guidance, but the index didn’t stay in the red for long as a weaker pound helped some companies gain ground. Despite the difficult operating environment and uncertainties over Brexit, Compass Group and Smith & Nephew said they still expected to see growth over the next year, helping the FTSE firm a little.

The FTSE notched lower on opening, pulled down by travel group TUI and its revised earnings guidance, but the index didn’t stay in the red for long as a weaker pound helped some companies gain ground. Despite the difficult operating environment and uncertainties over Brexit, Compass Group and Smith & Nephew said they still expected to see growth over the next year, helping the FTSE firm a little.

Pound falls below $1.3

Sterling is below the $1.3 level this morning as the PM’s Brexit efforts seem to be going nowhere. Fresh from a visit to Belfast Wednesday where her comments seemed to conflict with what some of her party members wanted, Theresa May is heading for Brussels to try and get some fresh concessions from the EU over the Irish border. But with the vitriol in Brussels on the rise she is more likely to get a no, non and nein. 

The specter of hard Brexit has knocked sterling out of a narrow channel in which it has been sitting for most of this week, causing it to slide to $1.213, down 0. 15%. The pound weakened less against the euro, down 0.09%, not on its own merit but because the common currency is under fresh pressure following several sets of weaker economic readings. 

BoE to keep rates steady but cut forecasts

Though the Bank of England is set to keep rates flat at its meeting today the country’s sluggish economic growth and expectations of a further slowdown over the coming months mean that the rate setters will look into increasing rates later this year. 

More evidence, if any was needed, came from mortgage lender Halifax’s latest data showing that house prices dropped 2.9% in January. 

Brexit will continue to paralyse not only any economic growth but also any decision making, potentially into the next BoE meeting which is due only days before the end of March deadline.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.