View the article online at http://citywire.co.uk/money/article/a659509
Pound and FTSE under pressure in nervous markets
Miners lead London markets to small losses. Japan's yen and Britain's pound drop sharply.
Mining shares led the FTSE 100 lower on Monday morning, while the pound came under increasing pressure amid data showing speculators have been attacking the currency and comments from a senior Bank of England policymaker reinforcing sterling’s weakness.
With the US stock market closed for the day and small falls from European shares – Britain’s FTSE 100 fell back three points to 6,325 – attention was firmly on currency movements in the wake of last week’s G20 meeting.
The pound dropped 0.3% to $1.5474 after a report from the US Commodities Futures Trading Commission showed that more speculators are shorting – betting the pound will fall – than buying it.
The pound was also guided lower by comments from Bank of England policymaker Martin Weale who said that a falling pound may be the only fix for Britain’s swollen budget deficit.
William Poole, a foreign exchange strategist at FC Exchange, explained: 'By stating that “the most natural means of resolving the problem (of our stagnant economy) is for the nominal exchange rate to fall” Weale has made markets suspicious that the BoE may actively weaken GBP in what is a bit of a breakaway from their usually conservative rhetoric.
'We don’t see this happening outright, but given how vulnerable the pound is at present, it doesn’t take much to give it an extra nudge downwards. Policy makers are certainly proving quite tactful at the moment in their wording but we think that is as far as it will go,' Poole added.
Sterling has come under growing pressure so far this year amid concerns about the strength of the UK economy, especially in comparison to tentative improvements in the eurozone.
Jane Foley, a strategist at Rabobank, said: ‘The road to recovery is set to be slow and painful and the current loss of faith in the pound is not without good reason'.
The Japanese yen fell even further, off 0.6% to 94 yen per US dollar, after the G20 meeting ended without any real censure of Japan’s policies to weaken the currency.
ITV (ITV.L) was the biggest riser, up 3% to 120p on news reports of a bid for the company
News sponsored by:
Making the most out of Europe's potential means seeing things differently. Learn more about how BlackRock's focused approach to investing in Europe helps investors unlock the continent's vast potential.
In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
More about this:
Look up the shares
- Antofagasta PLC (ANTO.L)
- Vedanta Resources PLC (VED.L)
- Eurasian Natural Resources Corporation PLC (ENRC.L)
- ITV PLC (ITV.L)
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add firstname.lastname@example.org to your safe senders list so we don't get junked.
by James Phillipps on Jan 23, 2017 at 14:02