Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

FTSE Ends Flat As Sterling Slides Towards $1.40

Published 29/01/2018, 18:24
GBP/USD
-
UK100
-
DJI
-
AAPL
-
HG
-

FTSE ends flat as sterling slides towards $1.40

The FTSE certainly has a slow start to the week, trading within an uninspiring 20-point range for much of the day. Miners were the standout performers, thanks to solid gains by copper. The only half attempt at a move northward by the index came thanks to the sliding value of the pound, around midday. The decline was short lived versus the euro, however stronger than forecast US consumer spending figures meant that the dollar has been able to extend its gains moving through the US session piling the pressure on GBP/USD.

US consumer spending picks up in December

Sluggish inflation has been troubling the Fed for most of 2017, with several Fed officials citing slow inflation as a reason to hold off from raising rates too quick in 2018. So PCE figures, the Fed’s preferred measure of inflation, moving marginally higher in December to 0.2%, up from 0.1% in November, was a relief for the market. On a yearly basis PCE came in as forecast at 1.5%, although still significantly below the Fed’s 2% target, which it has failed to hit since mid-2012.

Inflation expectations have increased following the release and the dollar moved higher versus a basket of currencies, firming its position above 89, as it looks to take out 89.50. GBP/USD slid through $1.41 on the release of the PCE figures and is currently finding support at $1.4050-20, but with Brexit headlines starting to flow again and some distance still remaining between the UK and the EU over a transition deal, it looks dubious as to whether it this level will hold. Rumours of no-confidence for Prime Minister Theresa May are also doing little to help the ailing pound, which could head straight towards $1.40.

Dow dumps 100 points

In a complete role reversal, the US equity indices are experiencing in a rare down day. The volatility index, which is often referred to as the fear gauge, moved sharply higher as the Dow dumped over 100 points and the S&P dipped 0.5%. Nasdaq listed Apple (NASDAQ:AAPL) has been the biggest decliner stateside following reports it could cut its iPhone X production. However, with earning season in full flow this week and earnings beating expectations 78% of the time, today’s downward trajectory of US indices is unlikely to stay with us for the rest of the week.

After a quiet start to the week, tomorrow could hold a bit more excitement for the European session, with Q4 eurozone GDP, German inflation and UK net consumer credit. Whilst the US will focus on consumer confidence and President Trump’s State of the Union address.

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.

Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Original post

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.