FTSE Gains as Pound Falls

Wednesday, 21st March 2018

The inflation figures were published in anticipation of the Bank Of Englandís monetary policy announcements, which are due on Thursday. There is also a focus, internationally, on the U.S. Federal Reserve, who are beginning their two day policy meeting.

The FTSE 100 gained 0.3 percent, bouncing back from a low point reached on Monday. The pound slipped to $1.3992, down from $1.4025 late on Monday night. Intraday, the Sterling did trend up, but the disappointing inflation news helped to drag it down. A weak pound is good for the FTSE 100 because of the international weighting of the index. Around 75% of the revenue for the companies in the index comes from overseas, so a week pound can boost revenues.

The BOE will assess the recent inflation report and it will be a factor in their next policy decision. The expectation is that the bank will announce a rise in interest rates for May.

The US Federal Reserve's policy meeting began today, and they will be announcing their plans in two days. Both of these meetings are important for the index, and will be the main drivers for the London and US markets over the rest of the week, although Brexit negotiations could also be a cause of some significant movement in the FTSE 100 and European markets.

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