Sterling fails to fly

Yet another fall in real wages
FTSE stuck in a holding pattern
Reckitt looks pricey versus rivals

Chris Beauchamp IG

It’s not been a great week for sterling bulls. First inflation comes in as expected, disappointing those hoping for a bounce in prices, and then the wage gap stays firmly in place. This should send a firm signal to the BOE to not get too excited about possible rate increases. A brief spike above $1.32 for cable was reversed as the pair headed back to the lows of the day. It looks like the rally off the October lows has faded away. The FTSE 100 took a brief knock as the pound rallied, but normal service has been resumed, with the index broadly in the same place it was a week ago. Equities in the UK and Europe have been mostly frozen in the same place this week, but the repeated attempts to

break higher suggest that the next move will be up, rather than some cataclysmic late-October selloff.

Reckitt Benckiser managed to buck the trend seen so far this week, as a sharp downgrade to forecasts did not produce an almighty rout in the share price. Still, for a company trading at 24 times current earnings the prospect of another reorganisation coupled with an expectation of no growth should spark some serious revisions while Unilever looks to be a much better way of getting exposure to the sector.

Ahead of the open, we expect the Dow to start at 23,041, up 44 points from last night’s close and starting the day above 23,000 for the first time ever.

Author

Chris Beauchamp

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.