After a thorough roasting on Monday the FTSE continued to be on the back foot this Tuesday, missing out on the gains seen elsewhere as it wilted in the face of sterling’s sterling performance.
Dipping 0.1% the UK index spent the early moments of the session dancing around the 7200 mark, sporadically dipping under that key level to strike a one week low. That’s a stark contrast to the DAX and CAC, which have carried over the Dow Jones’ positive influence from last night to rise 0.3% apiece. One positive for the FTSE is that the oil sector, such a problem on Monday, looks ready to claw back yesterday’s losses, with BP (LON:BP) up 0.7% following a 0.4% jump from Brent Crude itself.
It seems, however, that the negative correlation between the FTSE and pound has potentially returned after a few months on the sidelines. Climbing another 0.3% against the dollar, sterling is now tickling $1.437 to hit its highest level since the Brexit vote all the way back in mid-2016. And this momentum isn’t just localised to cable and the flagging greenback; no, against the euro the pound has nudged up by 0.1%, taking it to a fresh €1.1585-striking 11 month peak.
Whereas Monday’s rather sparse economic calendar left sterling to its own devices, the next few days may provide a challenge to the pound’s recent push. As it has been since inflation – which is updated tomorrow – started to sky rocket, the focus of Tuesday’s jobs report will be wage growth. And things are looking up – after months and months of stagnation, the average earnings index is set to build on the gathering momentum seen in March, with analysts forecasting a near 2 and a half year high of 3.0%. If accurate that reading may give sterling another hawkish boost, and could see cable tease $1.44.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved.