FTSE 100 likely to start higher, GBP scales past 1.37 vs USD

February 01, 2021 07:10 PM AEDT | By Team Kalkine Media

FTSE 100 likely to start higher, GBP scales past 1.37 vs USD

January ends in red

With the vaccination drive is in full swing, the UK government is progressing ahead to its target of inoculating the maximum number of people from the first four priority groups by the middle of this month. Investors are eyeing the periodic review of the national lockdown that can develop a possibility of relaxation. However, the recent studies conducted on the spread of the mutated variant don’t indicate a chance of softening of nationwide curbs any time soon.

The restated worries among the market participants were quite noticeable in January. After a blistering start, the UK stock markets retreated continuously paring the first week of gains and recording a month-to-date loss. The benchmark FTSE 100 added nearly 6.4 per cent in the first week of January continuing the gain in December 2020.

But with the growing uncertainties around the inability to contain the spread and increasing number of hospital admissions collectively slashed the not-so-strong optimism among the investors. After the first week, the headline FTSE 100 registered a decline of as much as 6.78 per cent, negating the first week gains and steering the index to close January 2021 with a monthly loss of 0.82 per cent.

GBP regains 1.37

The GBP vs USD pair traded higher on Monday, recoiling from the previous close of 1.3699 at the interbank foreign exchange market. Around 0713 GMT, the GBP to USD currency pair was trading at 1.3727, up 0.20 per cent from the last close.

During the session so far, the pair has shuttled between a low and high of 1.3695 and 1.3754, respectively. The Bank of England had fixed a reference exchange rate of 1.3719 USD and 1.1317 EUR against a unit of pound sterling on 28 January.

(Source: Refinitiv, Thomson Reuters)

Macro data to align equity direction

Even with the extant coronavirus vaccination programme, the global equities washed off considerable gains in January largely due to the immoderate situation of Covid-19 pandemic. Investors are now waiting for the outcome of Bank of England’s first Monetary Policy Committee for 2021.

The Bank of England is set to announce the fresh interest rates on 4 February along with setting up the target for inflation and providing monetary guidance for the upcoming period. The announcement of GDP growth rate for the October-December quarter in the second week of February is also likely to provide a concrete direction for the domestic equities in the future.

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