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Summary
- FTSE 100 index traded little changed ahead of BoE MPC decision
- At around 0846 GMT, the GBP to USD pair was trading marginally lower
- Earlier yesterday, Dow Industrials surpassed 33,000 for the first time
The headline FTSE 100 index traded little changed on Thursday, 18 March, ahead of the Bank of England’s Monetary Policy Committee (MPC) outcome. The nine-member MPC of the Bank of England (BoE) is slated to announce the stance of the central bank and the decision on the key interest rates later in the day.
Markets remains flat
At around 0840 GMT, the FTSE 100 was trading at 6,759.84, down 0.04 per cent from the previous close of 6,762.67. The index has shuttled in a narrow range of 6,779.88 and 6,753.96, so far in the session today. The broader FTSE 250 index ticked up marginally and was trading 0.17 per cent higher, while the heavyweight stocks-laden FTSE 350 and FTSE All-Share followed the benchmark FTSE 100.
GBP stalls above 1.39
With the currency market bracing for the upcoming policy decision by the BoE’s MPC, the Great Britain pound (GBP) vs United States dollar (USD) has seemingly stalled at a level above 1.39. At around 0846 GMT, the GBP to USD pair was trading in negative territory, down 0.05 per cent at 1.3956 from the previous close of 1.3963.
During the day, the currency pair has oscillated between a range of 1.3937 and 1.4002 at the interbank foreign exchange market. The BoE had fixed a reference currency conversion rate of 1.3892 USD and 1.1680 against a unit of pound sterling on 16 March.
All eyes on BoE’s policy
Earlier this month, the BoE Governor Andrew Bailey has reiterated that the central bank is not willing to tighten the stance of monetary policy unless there are clear signs of an economic reversal as unemployment is expected to increase in the near future. With the unravelling of the destructive aftermath of the Covid-19 pandemic, there has been an extended narrative around the negative interest rates.
Silvana Tenreyro, an external member of the BoE’s MPC, has supported the notion of negative interest rates in the past a couple of times. However, other members of the MPC, along with Governor Bailey have time and again expressed their divergent views for not introducing a negative interest rate regime in the United Kingdom.
Dow breaks 33,000 for the first time
Earlier yesterday, the Dow Jones Industrial Average (DJIA) surpassed the psychological level of 33,000 for the first time after the United States Federal Reserve maintained the key lending rates near zero. The Fed Chair Jerome Powell-led Forward Open Market Committee (FOMC) further said that the committee doesn’t anticipate a hike in interest rates through 2023, but it expects the inflation to marginally overshoot the target of 2 per cent.
The Dow Industrials rose as much as 189.42 points, or 0.58 per cent to close at 33,015.37, after hitting an all-time high of 33,047.58. The wider share benchmark S&P 500 jumped 0.29 per cent to 3,974.12, whereas the tech-heavy indicator Nasdaq Composite gained 0.40 per cent to 13,525.20.
