FTSE lower as investors await next catalyst

After drifting lower throughout the morning, the FTSE quietly pared losses in the afternoon heading back towards the flatline, before falling again towards the close. With the US shut for President’s day, traders are waiting for the next catalyst, resulting in a very dreary session. With little in the way of economic data to focus on, politics and the pound were once again under the spotlight.

Reckitt Benckiser was leading the FTSE, up over 5% following the release of impressive results. Micro Focus International was second on the FTSE leader board, trading 4.5% higher as it’s share buyback programme kicked in.

Pound above $1.29

More broadly, the FTSE was lagging marginally behind its European peers thanks to the stronger pound. The pound continued to move higher versus the dollar on Monday, extending gains from Friday and pushing back over $1.29. The move higher in cable was more of a dollar weakness story, on improved risk sentiment thanks to US – Sino trade talk optimism. The pound was also finding support as investors start to once again price in an extension to Article 50, as last-minute Brexit talks to attempt to re-negotiate the Irish backstop arrangement show no signs of progress.

Labour breakaway pound negative longer term

The pound was moving higher, despite news of a Labour breakaway party. Whilst a breakaway from the main political parties is a rare event, is not in itself damaging to the pound. However, given that the breakaway group supports a second referendum this could be a fatal blow for the Brexit second vote campaign. Any fresh calls for a 2nd referendum will now be closely associated to the breakaway group and enemies of Corbyn. Labour can’t be seen to be supporting such a group. This means the longer-term impact of this notable event could actually be pound negative.

Whilst today has been a quiet day as far as economic releases are concerned, tomorrow could see a fresh injection of volatility amid UK wage data and Eurozone economic sentiment data.

Oil stays above $56.00

Oil remained in positive territory on Monday although slipped off earlier highs. After rallying to a three-month high of $56.73 in early trade, WTI has eased back, although it is still finding support at $56.00.

OPEC productions cuts and US sanctions on Iran and Venezuela are hitting supply. Meanwhile trade talk optimism is boosting the demand outlook after months of trade tensions have weighed on global growth.

CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD recaptures 1.08 as coronavirus fears weigh on market mood

EUR/USD has recaptured 1.08 as US bond yields retreat in reaction to growing fears about the coronavirus outbreak economic impact. Earlier, the pair plunged amid weak German data.


GBP/USD bounces above 1.30 as markets shrug off wage figures

GBP/USD is trading above 1.30 as investors ignore weak UK wage figures and Brexit concerns once again. Coronavirus headlines are eyed.


Altcoins push hard not waiting for a Bitcoin reaction

The Altcoin market has only needed one business day to see prices rise sharply again. Bitcoin, still, has adopted the anchor function and for the moment is giving up the battle for the $10000.

Read more

Gold firmer, near $1,600/oz on coronavirus fears

Renewed fears around the Chinese coronavirus (COVID-19) have been supporting the demand for the safe haven metal in past hours, taking the ounce troy to levels just shy of the key $1,600 mark.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors