FTSE 100 drops 108 points in 5 days despite strong Pound

FXOpen

If ever there was glaring evidence that the stock of large cap companies which are listed on the London Stock Exchange are completely uninfluenced by the highly liquid currency markets, this week’s FTSE 100 performance is it.

In fact, even a sudden increase in the value of the Pound, Britain’s sovereign currency, has not affected the performance of the basket containing the 100 most prestigious blue-chip companies listed on London’s premier trading venue.

During the past few days, and especially in the advent of the recent coronation of King Charles, the British Pound has been performing very well against its major peer, the US Dollar, rising to its highest point in over a year during the past few days.

The currency in which the 100 well established corporate giants whose stocks make up the FTSE 100 index report their metrics may well be Pounds, but despite the sudden optimism in the British economy, the FTSE 100 has been losing value.

Over the past five days, the FTSE 100 index has dropped by 108 points, resting at 7,765 at 10:00 BST today.

In fact, yesterday during the London trading session, the FTSE 100 dropped as low as 7,702 points, which is its lowest point in more than one month.

The FTSE 100 has languished a bit since the middle of March, when it dropped significantly to 7,335 by March 15, a far cry from the 8,001 points registered on February 20th, which was a euphoric moment for shareholders of British companies and traders alike, as the 8,000-point threshold had been broken.

It was just two years ago when the airwaves were awash with superlatives after the FTSE 100 index broke the 7,000-point mark. To see it go up by another 1,000 points in February 2023 was remarkable to say the least.

For now, those days are gone, and whilst the Pound goes from strength to strength against its transatlantic rival major currency, the British corporations on the FTSE 100 are experiencing a lull.

Some analysts are laying the blame at the door of very generic sets of circumstances such as the potential increase in interest rates that may be implemented by the Bank of England on Thursday this week.

Yes, that would perhaps cause extra costs for corporations which would have to pay more to service their commercial borrowings, but surely that would also affect private individuals, and therefore influence the Pound downwards? The Pound is stronger than it has been for a while, so consumer confidence remains high.

One of the components of the FTSE 100 index is sportswear retailer JD Sports, which is currently a subject of potential acquisition by French giant Groupe Courir for an expected £520 million, however that alone would be unlikely to have this much of a dampening effect on the entire index.

There has been a slight slowdown in the growth of Chinese exports, but that did not stop a healthy trading session take place in the Asia Pacific time zone today, but the strong levels of trading activity did not raise the FTSE 100’s value in the early hours of the London session and later hours of the Asian session.

Perhaps there is some weight behind the conservative approach being assumed in the run up to the Bank of England’s interest rate announcements this Thursday.

Trade global index CFDs with zero commission and tight spreads. Open your FXOpen account now or learn more about trading index CFDs with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Indices

NASDAQ Rally Shows Tech Stocks Are Back in Focus - But for How Long? Nasdaq-100 Price Hits All-time High after 4 Straight Months of Gains European Stock Markets on All-Time Roll Despite Economic Bleakness Nvidia's Successes Helps S&P 500 Price Reach Its All-time High S&P 500 Inches Down After Long Rally as FOMC Minutes Approach

Latest articles

Indices

NASDAQ Rally Shows Tech Stocks Are Back in Focus - But for How Long?

The NASDAQ index, well known as a premier listing venue for North American technology companies across the entire spectrum from the Silicon Valley giants to recently listed newcomers, has been going from strength to strength during the beginning part of

Forex Analysis

The Market Focusing on Speech of Federal Reserve Head

Despite the abundance of fundamental data of the past trading week, the main currency pairs continue to trade in rather narrow flat corridors. Thus, the US dollar/yen currency pair is trading above 150.00, from time to time testing

Forex Analysis

Swiss Franc Weakens after Inflation News

Inflation in the country fell in February to its lowest level in nearly two-and-a-half years, data from Switzerland's Federal Statistical Office showed on Monday. Although consumer prices rose 1.2% compared to a year earlier, there is reason to believe

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65.68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.