Weak GDP and strong pound drags FTSE lower

The FTSE is following Asian markets lower this morning, after a weak GDP reading and rising pound.

• FTSE suffers from strong pound

• UK GDP tumbles, after string of weak data points

• Barclays shares tumble despite strong profit growth

The FTSE is suffering amid a widespread dampening of the optimism seen in the first half of the week. This morning’s surge in the pound has hurt exporters in the FTSE, with a stronger pound typically associated with a loss of competitiveness in the global marketplace for UK exporters. This morning’s UK Q1 GDP figure confirmed what many expected, with the rate of growth slowing to the lowest rate in a year. The deterioration across exports, PMI surveys, industrial production and consumer confidence all pointed towards a weakening pace of growth, which has proven to be the case. As we enter a post article-50 world, it is likely that we are going to see a more hesitant and restrained UK economy than before, with firms holding off on investment decision-making until they get greater clarity.

Barclays shares tumbled at the open despite what was an incredibly encouraging set of earnings released this morning. A comprehensive outperformance for the firm drove profitability to more than double. The market disappointment can be partly attributed to the fact that Barclays failed to live up to their US counterpart’s performance in the trading division, with fixed income and equities trading income down. Considering that most of the US investment banks enjoyed a massive uptick in fixed income trading profits, it is worrying that Barclays saw revenues fall despite market expectations of a 17% rise.

Ahead of the open we expect the Dow Jones to open 31 points lower, at 20,950.