FTSE set for lowest weekly close in 3 ½ months

It’s not been a good week for UK stocks, with the FTSE 100 on course for its lowest weekly close since early May. The benchmark is now back towards the lower reaches of its recent range and should it make a decisive drop beneath the 7500 level then there could well be more downside ahead. It’s also been another week of losses for the pound, with sterling sliding once more against all of its major peers, despite better than expected unemployment and retail sales releases while inflation also ticked higher according to the most recent CPI data.

Lira comes back under pressure

After hitting its lowest ever level against the USD late on Sunday night, this week has seen a fairly good recovery in the Turkish Lira, with the currency rallying around 20% from its lows to yesterday high. Having said that, this has only seen price recover back to where it was last Friday morning before it crashed lower and plenty of downside risks remain. In the last couple of hours the Lira has come back under pressure, falling more than 7%, with a warning from the US that they may impose further sanctions nipping the recovery in the bud. The measures implemented by the Turkish authorities thus far have been lacklustre and not really dealt with the underlying issue of runaway inflation in a satisfactory manner and it would be no surprise at all if there’s more pain ahead for Turkish assets.

Monzo to become a unicorn

With a fresh round of fundraising expected to value the company at $1.5B, British digital bank Monzo is set to join the illustrious “unicorn” club. Unicorns are defined as privately held startup companies valued at over $1 billion, and with the bank signing up 18,000 customers a week, it is not hard to envisage the firm disrupting the status quo among traditional banks in the not too distant future. The latest valuation is over 4 times the level estimated the last time Monzo sought additional funds in the back end of last year and shows investors increasing appetite for disruptive technologies in traditional fields.

Like many firms in similar positions the company is burning through cash rapidly, with a pre-tax loss of £33m last year and the most recent customer deposits at the end of February at ust over £70m - less than £150 per account. One of the big draws of Monzo since launching a pre-paid card back in 2015 is that the firm didn’t charge a fee to use abroad on either cash withdrawals and card transactions. The firm chose to use this loss-leader to attract new clients, which has no doubt worked, but the question is now whether it will become customers primary current account or remain as a cheap way to pay on holiday once or twice a year. Given the current level of deposits it appears there is some way to go before this switch is made by a large enough number of people to justify the recent lofty valuation.