​FTSE set to end the week lower

After two successive weekly gains, the FTSE 100 is on course to close lower than Monday's opening level with the benchmark seeing some selling heading into the weekend. If the market closes around these levels it will only represent a small decline that may be attributed to profit taking after hitting its year-to-date high on Wednesday afternoon. After a plethora of releases last week, there's been little by the way of UK data to drive the markets since Monday, with central bank meetings from the US and Japan being the main market-moving events. The pound against the US dollar is set for a small weekly gain if the price closes at current levels, as the trading range has narrowed once more as traders look to next week's BoE meeting as a possible catalyst for the market to expand after the recent coiling.

Central bank inaction moves markets

Both the Fed and BoJ left their monetary policy effectively unchanged this week - the BoJ did announce an expansion of their ETF purchase programme, but this is a minor tweak rather than a major alteration that many had expected - but despite this, both events caused substantial moves in the market. The Fed's decision preceded the largest single day rally of the month in Gold, as the precious metal soared higher by approximately 1.5%. In Tokyo this morning the Yen appreciated rapidly after the largely unchanged monetary policy announcement, because many expected more aggressive easing to be unveiled. Both decisions may be seen as slight delaying tactics until the September meetings, but the Fed in particular could be causing a problem for themselves as the relatively sanguine macroeconomic backdrop is supportive of a further increase and the central bank risk finding themselves stuck behind the curve.

Pearson leads FTSE lower

The FTSE 100 is trading lower by around 20 points at the time of writing, with multinational publishing firm Pearson the worst performing stock, dropping by just over 10% following its latest trading update. This morning's release showed an 11% fall in revenues for the first half of the year, and in early trade all the gains in the stock since the EU referendum - which were largely due to the slump in the pound - have been erased. At the other end of the index Barclays shares are higher by around 7% after a better than expected set of earnings for the first half of the year. The latest trading update from the bank shows group profits of £2.037 bn, which whilst coming in substantially below the equivalent for the same period last year is just above the consensus estimate amongst analysts.