FTSE flounders despite weaker pound

The FTSE has followed its Asian counterparts lower this morning, as we head into a major week for the markets says Joshua Mahony, market analyst at IG.

FTSE flounders despite weaker pound

The FTSE 100 has suffered a somewhat downbeat start to the week despite a sharp move lower in the pound this morning.

Friday’s dour finish across US markets seems to have paved the way for this morning’s weak trade, with markets turning their focus away from Donald Trump’s business-friendly measures and towards his more controversial decision to ban citizens and refugees from seven states in the Middle East and Africa.

As we enter February, we are due the typical raft of economic data, with the Bank of England’s ‘Super Thursday’ and Friday’s US jobs report meaning that volatility is expected to grow as the week progresses.

Theresa May’s decision not to rescind Donald Trump’s invite to meet the Queen should be seen as a positive for UK-US relations, even if it will enrage many. Coming at a time when the UK is seeking to build relationships as a precursor to trade negotiations that will dictate our economy for decades to come, it makes economic, if not ethical sense to continue cultivating a strong UK-US bond despite likely hurdles that arise.

Theresa May is one of few major leaders to not criticise Trump over his entry policies, yet arguably the UK has most to lose by souring this relationship given impending negotiations.

Today’s announcement from Danish firm Novo Nordisk that they will invest £115m into a new science centre in Oxford is a boost for the UK economy on a number of fronts. Amid all this talk of seeing foreign buyouts of UK firms and properties as a vote of confidence, much of that has simply been opportunistic purchases based on a weak pound. However, the staggered nature of this investment highlights the fact that firms still see the UK as a great place to set up over the long term, irrespective of the exchange rate.

Ahead of the open we expect the Dow Jones to open 54 points lower, at 20,040.


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