Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

FTSE Heads Into Close Off Lows; Pound Steady Ahead of Wage Data

Published 14/05/2018, 16:21
Updated 14/12/2017, 10:25

After rallying 2% across the course of the previous week, the FTSE fell steadily through today’s session, as stronger pound overshadowed a rally in the price of oil and excitement from more M&A activity. Late in the day a strong start on Wall Street help lift the FTSE off session lows.

Oil recovers back to $71

Oil fell off its recent high after an increase in drilling in the US weighed on sentiment on Friday. US drillers added 10 new rigs last week bringing the total to 844, the highest rig count since March 2015.

Concerns are growing that increased US oil production will start changing the fundamentals in the market bringing the price lower. However, these losses were pared as the European session kicked off, as investors turned their attention back to the fallout of the US withdrawal from the Iran nuclear deal. WTI hit a bottom at $70.28 before charging higher to its resistance at $71.00. Oil majors traced the price of oil higher, wit the likes of BP (LON:BP) appearing on the FTSE leader board.

IWG up 20%

M&A activity has been rife over the last few weeks helping buoy the FTSE. There is nothing like news of a possible bidding war to attract the attention of investors. IWG (LON:IWG) rallied 20% after the workspace provider attracted takeover approaches from three potential suitors opening the doors to a possible three-way bidding war. This comes hot on the heels of ZPG (LON:ZPG) last week and Takeda’s (T:4502) takeover of Shire (LON:SHP) just prior to that.

Pound to $1.37 on UK wage data?

The pound edged higher versus the dollar, which was more a story of dollar weakness rather than any standout sterling strength, as the dollar fell for the fourth straight session. Yet even the corrective slide in the dollar failed to reignite any serious buying action in cable as the pair climbed just 0.3% higher. The dovish inflation outlook from the BoE continues to weigh heavily on sentiment for the pound, it will take, at the very least, a seriously impressive wage growth number tomorrow to drag the pound out of its current familiar range.

Average weekly wage growth is expected to have increased to 2.9% in the three months to March, up from 2.8% in February. Should the reading surprise to the upside GBP/USD could look to target $1.37 as investors cheer increasing domestic inflation, on the contrary a weaker than forecast number could send the pound tumbling back towards $1.35.

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

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.