FTSE stalls after BoE-fuelled GBP rally

A strong pound is putting the buffers on FTSE strength, yet with market brushing aside the latest North Korean test, the global risk-on sentiment may be here to stay

• FTSE dragged lower by rampant pound

• North Korean test fails to lift havens

• US data brings focus onto the dollar

The FTSE is suffering at the hands of a rampant pound this morning, as we wrap up a week of intense focus on the UK economy. Resurgent inflation, weak wage growth, and a hawkish BoE have resulted in a jump for the pound, which has hit the highest level in a year. A mixed session overnight highlighted the ambivalence markets are showing towards action from North Korea, with the widespread selling of late notably missing on this occasion. Following a new set of sanctions, it seemed almost a foregone conclusion that we would see North Korea emerge with another test before long. Yet the fact that markets have chosen to brush aside this latest test is testament to how far market opinion has come
after the hysteria of recent weeks.

After three days of UK focused trade, today sees the emphasis shift back onto the US, with the release of retail sales and industrial production figures, alongside manufacturing and consumer sentiment surveys. The dollar’s decline has been appeased somewhat of late, with the increased talk from Mnuchin pointing towards a potential tax cut coming to fruition in the near future.

Ahead of the open we expect the Dow Jones to open 8 points higher, at 22,111.