UK stock markets are likely to open a tad higher on Wednesday, 13 January, with the Asian equities trading largely in green tracking the upbeat Wall Street. The Great Britain pound (GBP) registering a marginal recovery is expected to support the London equities as the United States dollar (USD) slipped against a basket of currencies on Wednesday. UK shares ended in the negative region on Tuesday after rebounding from the intraday bottom in the late trades.
Equities remain volatile
As per the closing data on London Stock Exchange, FTSE 100 finished at 6,754.11, down 44.37 points, or 0.65 per cent, from the previous mark of 6,798.48. In the present year so far, the headline index has gained 4.54 per cent. The barometer is likely to witness a muted activity in this week ahead of the macroeconomic data release on Friday.
The cloud of uncertainty seemed to have returned with the rising number of coronavirus cases, warnings from the Chief Medical Officer and Health Secretary, and the restored buzz around negative interest rates. The upcoming set of corporate earnings for the October-December quarter and the undying worries over increased restrictions along with the national lockdown are likely to play a crucial role in charting the direction of London equities in the near future.
BoE Governor on negative rates
The notion of negative interest rates has been renewed after the external member of the Bank of England Silvana Tenreyro said a negative interest rate regime can be beneficial for the United Kingdom and can accelerate the recovery.
The Bank of England Governor Andrew Bailey on Tuesday itself disobeyed the suggestions on negative rates and warned that the Britain’s economy has been facing the darkest hour. The Bank of England has been under discussions for adjudging the feasibility of negative rates in Britain. Governor Bailey has said there were a lot of issues with negative interest rates and introducing a similar regime in England could hurt the banks.
Separately, Chancellor of the Exchequer Rishi Sunak has recently said that the United Kingdom’s economy might need to see its worse before getting better.
GBP improves
The GBP vs USD pair was trading at 1.3678, up 0.11 per cent, at 0706 GMT, from the previous close of 1.3663 at the interbank foreign exchange market. During the session so far, the currency pair has shuttled between a high and low of 1.3694 and 1.3658, respectively. The Bank of England had fixed a reference exchange rate of 1.3492 USD and 1.1103 EUR against a unit of pound sterling on 11 January.
GBP vs USD (13 Jan)
(Source: Refinitiv, Thomson Reuters)
Commodities shine
The safe-haven market continued to enjoy investors’ attention with the gold extending gain on Wednesday. An ounce of yellow metal was trading at $1,859.62, up 0.27 per cent, from the previous close of $1,854.66. Energy market also bounced ahead on Wednesday with a barrel of Brent crude oil trading at $57.14, up 0.99 per cent after hitting a fresh 11-month high of $57.41 from the previous close of $56.58. WTI crude oil traded 0.96 per cent higher at $53.72 per barrel.
