FTSE opens higher on RBS news but spotlight today on BoE rate decision

Fiona Cincotta CityIndex

The FTSE 100 opened higher, up 0.26% at 7,682.02, buoyed by a higher close on Wall Street, rising oil prices and Royal Bank of Scotland news.
Asian markets also traded higher across the board except for Singapore, with the Hang Seng up 0.9% at 30,805.88 and the Nikkei 0.3% higher at 22,486.01. The biggest surprise this morning came from BT as the company’s shares plunged 7.59% to 238.60 after the telecoms firm revealed plans to plug an £11.3 billion gap in its pension budget, to cut 13,000 jobs and to move its London headquarters. The strategy update was released as part of the company’s fourth quarter results which showed a pre-tax profit of £872 million, broadly in line with expectations, and a 1% increase in adjusted EBITDA to £2.1 billion.

In contrast, Royal Bank of Scotland shares started the day on a positive note, up 6.12% at 289.60, after the bank agreed to a civil penalty to settle a mortgage probe in the US. RBS said it will pay $4.9 billion in fines to settle an investigation by the US Department of Justice into mis-selling of residential mortgage-backed securities between 2005 and 2007. The UK government plans to re-privatise RBS by selling £3 billion before the end of 2019 but was holding back until the DoJ dispute was resolved. All eyes today will be on the Bank of England rate decision due to come out at 11.00. A few weeks ago a rate increase to 0.75% from the current 0.50% seemed a given but after a series of weak economic data the decision will be less straight forward. If there is a move higher it will have the capacity to stymie house price growth and consumer spending and will in the medium term affect home builders and high street shops.

Author

Fiona Cincotta

CityIndex

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold holds above $5,000 as bears seem hesitant amid Fed rate cut bets

Gold edges lower at the start of a new week, though it defends the $5,000 psychological mark through the Asian session. The underlying bullish sentiment is seen acting as a headwind for the bullion. However, bets for more rate cuts by the Fed, bolstered by Friday's softer US CPI, keep the US Dollar bulls on the defensive and continue to support the non-yielding yellow metal as the focus now shifts to FOMC Minutes on Wednesday.

Week ahead: Data blitz, Fed Minutes and RBNZ decision in the spotlight

The US jobs report for January, which was delayed slightly, didn’t do the dovish Fed bets any favours, as expectations of a soft print did not materialize, confounding the raft of weak job indicators seen in the prior week.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.