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FTSE rallies as Carney comments hit pound

Comments from Bank of England governor Mark Carney about the influence of global economic slowdown on UK inflation and the need to possibly reign in UK interest rates rather than raise them caused the pound to tumble overnight but helped the main FTSE index rise to its highest level in ten months. 

Supportive signals from Asia were also weaker as markets there evened out after the initial burst of optimism over Sino-US trade relations began to fade. 

A mixture of consumer-focused firms including betting group Flutter Entertainment and sport clothes provider JD Sports led the index higher. On the declining side Sainsbury took a slight hit after the company reported a 1.2% drop in retail sales in the latest quarter. However, the actual stock lost only 0.3%, a relatively small decline given that the market has been pricing in lower sales at one of the UK’s largest supermarkets.  

The pound is still struggling this morning although it bounced off the morning’s low of $1.2550 as investors try to assess if any of Carney’s comments can be taken in a positive way for the currency. The BoE governor went out of his way to stress the positive impact a regulated deal-based Brexit would have on the UK economy. The BoE as well as the markets are currently assuming a high likelihood for a no-deal Brexit and have responses in place for this kind of outcome. 

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