The pound took an absolute pasting last night and although the rationale behind the move is still being actively discussed, the news has once again given the FTSE-100 a shot in the arm.
By Tony Cross, Monk Communications, 7th September 2016
Sterling’s depreciation is favouring the resource stocks with their US dollar denominated assets, whilst at the opposite end of the board it’s easyJet that is the day’s biggest faller so far – yesterday’s profit warning is still dragging and the fact benchmark US crude oil is back above $50/barrel is doing the stock no favours, either.
Looking ahead, the big number for the day will be the US non farm payrolls. The headline number is expected to impress, but the market’s focus is more likely to revolve around the scale of wage growth. Anything too hot here will suggest that inflationary pressures are building and in turn this will strengthen the case for Federal Reserve interest rate hawks to push through monetary policy tightening without delay. At this rate although it would be politically contentious, we still shouldn’t rule out some action in the November meeting.
Understanding what was behind that move for the pound last night remains important but even is we get no further clarity here, that US jobs number will provide some fresh direction ahead of the weekend break
