The FTSE 100 is trading higher by more than 50 points this morning as the index remains well supported and currently trades little changed on the week. The pound is fairly mixed on the day as we come to the end of what seems likely to be a week of consolidation for sterling.
Britain to take pragmatic Brexit approach
At the end of a busy week of economic releases and political developments in the UK, the pound remains uncertain as to where the path of least resistance lies going forward. Last week’s unexpected loss of a Conservative majority was widely seen as GBP negative but there has been a lack of substantial follow-through to the downside since. An increasing number of calls for higher rates amongst MPC members saw a spike higher in the pound yesterday but again there’s not been a significant extension on the initial move. The currency is seeing a narrowing of its trading range against most of its major FX peers and there is a growing sense that it is coiling ahead of the next large move.
Dip buyers step in once more
Whilst the FTSE 100 looks set for a second successive weekly decline, the market has recovered well after dropping to its lowest level in over a month yesterday following the Bank of England rate decision. The growing dissent amongst rate-setters at the decision to keep the base rate at all-time lows came a something of a surprise, and even if one of those calling for rate rises was voting for the last time - Kristin Forbes’ term is coming to an end - the development does come as a hawkish shift in the bank’s monetary policy stance. There is still some way to go before a majority vote for a higher base rate but the increasing possibility of such an event does pose a potential headwind to stocks. The rise seen on the leading UK stock benchmark is impressive in its breadth with less than a dozen blue-chips not joining in the rally. BT is the worst performing of the lot and lower by almost 2%, while there’s some slightly surprising weakness in Tesco (LON:TSCO) after the supermarket announced a fairly solid all-round set of results before the open.