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Strong Pound Hampers FTSE

Fri, 26th Jan 2018

The FTSE 100 took a slight knock during early trading, as a steep rally for the pound hit the earnings of FTSE 100 companies that take their income in foreign currencies. The UK’s leading index is home to a number of companies who see their profits increase when the pound is weak, and fall when the pound is strong, so the Forex charts can be a good barometer for the health of the index.

One of the worst hit shares was BAE Systems. The contractor shed 2.6 percent, while drugmaker AstraZeneca shed 1.8 percent, and British American Tobacco is down by 1.2 percent.

The worst performer of the day, however, was accountancy software company Sage. The company saw its share price fall by 8.1 percent - partly because of poor first-quarter results, and partly because it has a significant presence in America, so takes a lot of its earnings in dollars.

Overall, the FTSE 100 was down by 0.4 percent, while in the wider European markets the Stoxx 600 was steady, and the Xetra Dax 30 was also steady. The Mid-Cap FTSE 250 is down by 0.4 percent. The falls, however, were offset by better than expected UK GDP growth figures, which helped the index to get off to an early strong start - however, it was those strong figures which contributed to the strength of the pound versus the Euro and Dollar, and the resulting dip in the shares of many of the constituents of the index.

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