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UK stock markets are expected to start on a negative footing on Friday, 22 January, as the Great Britain pound (GBP) slipped in red after reclaiming 1.37 against the United States dollar in early trade.
Fears overpower optimism
The sustained worries regarding the fear due to fresh Covid-19 cases among the market participants after a research report by Imperial College of London revealed that the prospective benefits of the vaccination drive may take weeks to generate immune responses.
The research suggested that the rate of infection may have only increased in the first few days of the national lockdown. On Wednesday, the UK witnessed the worst day so far after the administration reported over 1,800 fatal cases in 24 hours.
The persisting uncertainty, coupled with a fall in consumer confidence, have seemingly retired the apparently growing optimism due the large-scale inoculation targets set by the healthcare administration. The GFK consumer confidence fell to -28 in January from -26 in December.
The benchmark FTSE 100 index has failed to stage a comeback in this week and is down by 0.30 per cent week-to-date. The expected bounce back in the global investors’ confidence on the back of the $1.9 trillion stimulus package by the Biden administration has also faded away.
(Source: Refinitiv, Thomson Reuters)
Global equities tumble
The ongoing global cues have also battered by the time with Japan’s Nikkei 225 concluding 0.44 per cent lower, Australia’s ASX 200 finishing down 0.34 per cent, China’s SSE Composite ending 0.40 per cent lower, Hong Kong’s Hang Seng diving 1.55 per cent and India’s Nifty trading 1 per cent lower on Friday.
The headline FTSE 100 index settled at 6,715.42 on Thursday, down 24.97 points, or 0.37 per cent from the previous close of 6,740.39.
Other than the negative global signals, certain domestic difficulties are also taking a toll on the equity markets with the industries adjusting according to newly inducted trade regulations and custom guidelines mandated by the government after the completion of Brexit transition timeline.
GBP falls sharply
The GBP vs USD pair registered a favourable position on Thursday with a unit of pound sterling reclaiming 1.37 USD levels. The currency pair retreated sharply on Friday in the early morning session and was trading at 1.3670 at around 07:31 GMT, down 0.45 per cent from the previous close of 1.3732. During the day so far, the GBP to USD pair has shuttled between a high and low of 1.3738 and 1.3664.
The Bank of England had fixed a spot conversion rate of 1.3630 USD and 1.1259 EUR against a unit of GBP on 20 January. On Thursday, a unit of pound sterling registered at least a 33-month high equalling 1.3746 USD. Way back on 1 May 2018, a unit of GBP recorded a high of 1.3776 USD.
