• / Free eNewsletters & Magazine
  • / My Account
Home>UPDATE: FTSE 100 breaks 2-day losing run as pound slides

UPDATE: FTSE 100 breaks 2-day losing run as pound slides

UPDATE: FTSE 100 breaks 2-day losing run as pound slides


By Sara Sjolin and Victor Reklaitis, MarketWatch

But SSE falls after profit warning

U.K. stocks finished higher for the first time this week on Wednesday, getting a boost from a weaker pound and a rally for miners.

The FTSE 100 climbed 0.4% to end at 7,313.51, breaking a two-day losing run.

The gain "can be derived from a hawkish Fed Chair Yellen (and colleague Bostic) supporting continued gradual rate hikes (market implied probability of Dec rate hike now 70%)," said analysts at Accendo Markets in a note. Federal Reserve Chairwoman Janet Yellen and Atlanta Fed President Raphael Bostic, nonvoting member of the Fed, both hinted that a further rate hike in 2017 was likely.

"This has firmed the USD to the detriment of [pound] and [euro], but to the benefit of the both benchmarks' internationals/exporters," they added.

Sterling was recently down at $1.3401 from $1.3460 on Tuesday, after trading as low as $1.3364. It has fallen further below the $1.36 level hit earlier in September. The recent rally--when the pound rose to the highest level against the dollar since the Brexit vote in June last year--came after hints from the Bank of England it was preparing to raise interest rates in coming months.

However, the U.S. Fed's policy update last Wednesday points at a further rate increase in December, based on projection of the policy setter's outlooks plotted on a chart, known as the dot-plot. That has helped strengthen the dollar against its rivals. On Tuesday, after European markets closed, Yellen said (http://www.marketwatch.com/story/yellen-says-fed-should-be-wary-of-raising-rates-too-gradually-2017-09-26) it would be "imprudent" to leave monetary policy on hold until inflation hits the central bank's target.

©2017 Morningstar Advisor. All right reserved.