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FTSE 100 seen slightly higher, sterling under further pressure

Stock Markets Sep 26, 2022 07:40
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  • FTSE 100 seen slightly higher
  • Sterling falls to new low
  • Chancellor pledges further tax cuts

7.15am: Sterling hits new low

Sterling hit a record low against the US dollar in Asia-Pacific trading, extending the losses suffered on Friday, and moving closer to parity, following the min budget on Friday and with the UK chancellor pledging over the weekend to pursue more tax cuts.

The pound plunged nearly 5% at one point to around $1.0327, a record low since at least decimalisation in 1971, as belief in the UK’s economic management and assets evaporated.

The pound’s drop was driven by “growing concerns about the UK’s policy credibility”, says Alvin Tan of RBC Capital Markets.

Tan also flags the speculation that the Bank of England might be forced to raise interest rates to strengthen sterling.

He said: “GBP/USD tumbled to a record low below 1.04. There is also increasing speculation about an emergency BoE rate hike.”

7.00am: FTSE 100 seen slightly higher

FTSE 100 is expected to open slightly higher this morning after a bruising end to last week and despite losses in Asian markets overnight.

Spread betting companies are calling London’s blue-chip index up by around 17 points.

All eyes will be on the pound when the European trading day begins. Sterling fell to an intraday low of US$1.0349 earlier Monday, its worst ever level against the dollar.

In the US on Friday US markets suffered heavy losses at the close, as the CBOE Volatility Index — Wall Street's "fear gauge" — rose above 30.

The S&P 500 lost 1.7% to finish at 3,693 points; the Nasdaq sank 1.8% to hit 10,868 points, and the Dow fell 1.6% to reach 29,590 points - a new 2022 low.

Read more on Proactive Investors UK

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FTSE 100 seen slightly higher, sterling under further pressure
 

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