FTSE Slips as Pound Increases

The FTSE 100 got off to a weak start to 2018, as the pound gained strength against the dollar, hurting exporters.

shareprices.com - Wednesday, January 03, 2018

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After the first day of trading in the new year, the UK’s leading index had shed 0.52 percent, or just over 39 points, ending the day at 7648. This was a rather weak performance given that on the final day of trading last year, the index hit a record closing high.

The gains were caused, in part, by weakness in consumer based stocks - with shares in Unilever, British American Tobacco and Diageo all struggling.

Connor Campbell, a financial analyst for Spreadex, noted that the FTSE would likely be hoping that the weakness is just a short term blip, and that it will soon return to its record performances. The coming season could be a tricky one for the index, as major retailers are due to give updates, and economic conditions have been less than favourable.

The weakness was not limited to the FTSE 100. Markets in Paris and Frankfurt were also losing ground, shedding 0.4 percent and 0.5 percent each. Trading volumes were low, as many investors have not yet returned to work after the new year break.

Both the pound and the euro rose against the US dollar, and the dollar was being held back by concerns that the Federal Reserve may decide not to increase interest rates as rapidly as previously hoped over the next few months. The European banks are expected to follow the Fed, so this could put a dampener on growth.


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