Weaker pound keeps FTSE elevated
A weaker pound helped the FTSE bounce higher even as its European peers dropped into the red before recovering again
Share this:
A weaker pound helped the FTSE bounce higher even as its European peers dropped into the red before recovering again. Monday’s trade deal optimism faded under a lack of concrete evidence and investors are subdued following China lowering its GDP forecast. As a result, European markets pared earlier gains and Wall Street opened in the red.
We have heard that we are close to a trade deal so many times. The markets are looking for something more tangible now for the rally to take a leg higher. Particularly given the slowing growth in China, amid high levels of debt and trade dispute issues. We expect to continue seeing a level of caution in the markets as investors wait for fresh developments in US – Sino trade talks.
Pound drops no progress Brexit & UK Service sector data
Data showed that the UK service sector managed to avoid contraction in February. The service sector pmi jumped to 51.3 in February after dropping to 50.1 in January and ahead of expectation. However, delving deeper into the numbers, there was clearly little to celebrate. The details of the report make it clear that the UK economy is grinding to a halt amid Brexit uncertainty, as consumers and businesses delay taking decisions ahead of 29th March.
The most unsettling point was the sharp decline in employment in the sector, as hiring fell by the most in 7 years. Firms putting off hiring decisions is not that surprising however, these figures are a world apart from the solid labour reports that we have been seeing. This doesn’t mean that the UK labour market is about fall apart but hiring over the next few weeks is expected to be slow.
The pound flinched lower on the release as concerns stemming from the details of the service sector report seeped in. However, it was the gloomy Brexit headlines that were responsible for sending sterling sub $1.31 for the first time in a week. Expectations are low for an imminent break through as UK Attorney General Geoffrey Cox goes to Brussels to try to secure concessions. This is reflected in the falling price of the pound. We expect the pound to remain under pressure across the week as investors start positioning ahead of next week’s Brexit voting bonanza.
Euro struggles ahead of ECB meeting
The dollar remains in demand. Not even better than expected eurozone retail sales data this morning could lift the euro versus the buck. Eurozone retail sales increased 1.3% in January, a marked improvement from December’s -1.4% decline. Other data points including Italian service sector pmi were also better than forecast.
However, the slew of stronger eurozone data is unlikely to change the ECB’s tone on Thursday, which is expected to err on the side of caution.
Related tags:
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Japanese Yen Forecast: USD/JPY 4% Rally Challenges Post-Intervention Downtrend 9 24 2026
USD/JPY momentum has shifted sharply higher, putting a major resistance confluence in focus as U.S. and Japanese event risk builds.
Oil Quietly Hands the Fed a Reason to Stay Hawkish
Oil prices and the U.S. dollar are both on the front foot as elevated energy costs feed Fed warnings that inflation may prove sticky.
USD/JPY outlook: Hawkish Fed recalibration pressures the yen
Stronger US growth momentum and rising Treasury yields are keeping USD/JPY pointed higher, even as Japanese policymakers try to limit the pressure building across domestic markets.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.