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Home news keeps FTSE in narrow range

Article By: ,  Senior Market Analyst
February 7, 2019 5:16 AM
The FTSE notched lower on opening, pulled down by travel group TUI and its revised earnings guidance, but the index didn’t stay in the red for long as a weaker pound helped some companies gain ground. Despite the difficult operating environment and uncertainties over Brexit, Compass Group and Smith & Nephew said they still expected to see growth over the next year, helping the FTSE firm a little.

Pound falls below $1.3

Sterling is below the $1.3 level this morning as the PM’s Brexit efforts seem to be going nowhere. Fresh from a visit to Belfast Wednesday where her comments seemed to conflict with what some of her party members wanted, Theresa May is heading for Brussels to try and get some fresh concessions from the EU over the Irish border. But with the vitriol in Brussels on the rise she is more likely to get a no, non and nein. 

The specter of hard Brexit has knocked sterling out of a narrow channel in which it has been sitting for most of this week, causing it to slide to $1.213, down 0. 15%. The pound weakened less against the euro, down 0.09%, not on its own merit but because the common currency is under fresh pressure following several sets of weaker economic readings. 

BoE to keep rates steady but cut forecasts

Though the Bank of England is set to keep rates flat at its meeting today the country’s sluggish economic growth and expectations of a further slowdown over the coming months mean that the rate setters will look into increasing rates later this year. 

More evidence, if any was needed, came from mortgage lender Halifax’s latest data showing that house prices dropped 2.9% in January. 

Brexit will continue to paralyse not only any economic growth but also any decision making, potentially into the next BoE meeting which is due only days before the end of March deadline.

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