Carney enhances GBP selloff

Dovish comments from Mark Carney have helped drag the pound lower yet, helping the FTSE 100 outperform.

• FTSE outperforms amid GBP weakness

• Risk sentiment on rocky ground

• Carney comments drive GBP lower

The FTSE 100 is continuing to outperform its peers as we head towards the weekend, with an overnight slide in the pound helping provide a welcome boost to internationally focused firms listed in the UK. The US led geo-political fears of recent times seem to have faded, with markets instead focusing on the slew of positive earnings figures out of the US. However, with the US-Chinese trade stand-off likely to rear its ugly head once more, there is a real fear that this represents a lull before sentiment turns sour again.

Yesterday’s appearance from Mark Carney has helped further the case for a more cautious approach from the BoE, with the week seeing expectations of a May rate hike reduce gradually.  The pound has been the worst performing major currency over the week, with falling inflation and retail sales figures reducing the case for an immediate rate rise at next month’s meeting. While Carney acknowledged that the BoE is likely to act in 2018, his interview with the BBC saw market confidence of a May hike shaken considerably. With market expectations for a May rate rise falling from 88% to 56% over the course of the week, there is a clear shift in market expectations which is in turn being reflected by
a devaluation in the pound.

Ahead of the open we expect the Dow Jones to open 52 points lower, at 24,613.