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UK stock markets are likely to open on a weaker note on Monday, 18 January, following a largely subdued Asian trade and persisting Covid-19 worries. The Great Britain pound (GBP) slipped marginally against the United States dollar at the interbank foreign exchange market in the early trade and has seemingly redeveloped a fresh wave of apprehensiveness amid the market participants.
Equities stay volatile
Barring the key indices of China and Hong Kong, all other major stock indicators tripped into negative regions with Japan’s Nikkei, India’s Nifty and South Korea’s Kospi losing up to 2 per cent, while Australia’s ASX finished 0.78 per cent lower. China’s GDP expanded cumulatively by 2.3 per cent in the calendar year 2020, propelled by a 6.5 per cent growth in the October-December quarter. This has lifted the equity market sentiments from Hong Kong to Shanghai.
With a yearly growth of 2.3 per cent, China has by far emerged as the nation which had avoided a contraction in a year when Covid-19 pandemic trembled the foundations of the businesses and livelihoods across the world.
For the UK, the preliminary fourth quarter GDP growth rate scheduled to be announced next month is likely to provide a direction to the markets. London equities are apparently waiting for a material positive action that can develop a possibility of a re-run after a bunch of subdued sessions in the first month so far. The benchmark FTSE 100 index has already recognised a windfall of gains in the last quarter of 2020 following the vaccine optimism.
The periodic review of the authorities, the rate of daily increase in the coronavirus cases and the subsequent uptick in the hospital admissions are expected to impart a tangible passage in near future. The Downing Street administration can soften some of the restrictions as the nation is progressing ahead swiftly with the inoculation drive.
According to the government, more than 3.8 million people across the UK have been vaccinated with the first shot till 16 January. With this, the UK health authorities have exceeded the vaccination numbers by the total coronavirus cases in the country. Till Saturday, the UK has recorded over 3.3 million infections since the onset of Covid-19.
GBP falls vs USD
At around 06:53 GMT, the GBP vs USD was trading at 1.3565, down 0.15 per cent from the previous close of 1.3586. So far, the currency pair has oscillated between a range of 1.3560 and 1.3602. The Bank of England has fixed a reference currency conversion rate of 1.3691 USD and 1.1272 EUR against a unit of pound sterling on 14 January.
GBP vs USD (18 Jan)
(Source: Refinitiv, Thomson Reuters)
Gold shines
Gold rose considerably on the first day of week, indicating the inclination of investors towards the safe haven assets as equities remained volatile. An ounce of yellow metal was trading 0.55 per cent higher at $1,838.56 from the previous close of $1,828.49. Energy market retreated on Monday with a barrel of Brent crude oil falling 0.36 per cent to $54.90, whereas WTI crude oil slipped 0.27 per cent to $52.28 per barrel.
