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FTSE down as political tensions and the BoE interest rate decision loom

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The FTSE was down 22 points in early trading this Monday morning with equities investors no doubt a little tentative given the political issues in Catalonia and a widely expected interest rate rise on Thursday.

Kingfisher and EasyJet were the morning’s best performers with the latter signing an agreement to acquire part of Air Berlin’s operations at the Berlin Tegel Airport. Berkeley Group has been the biggest faller in early trading with a fall of more than 6%.

The continuing tensions over in Spain have not helped the Euro which has had a poor end to the month following the cautious tapering program announced by the European Central Bank last week.

FxPro analyst, Edward Anderson commented “An independent Catalonia becomes a threat not just to Spain but to the EU as a whole, in some ways a greater threat than Brexit. EUR had been under downward pressure following the announcement of the gradual reduction of QE and the Catalan issue is not helping the single currency.”

This week is also going to be an important one for the Pound too. The Bank of England are meeting on Thursday to decide their interest rate policy and release their Quarterly Inflation report. ADS Securities analyst, Konstantinos Anthis suggested “The odds are in favour of the BoE announcing a rate increase in an attempt to battle the rising inflation pressures and market participants are pricing in an 89% chance of this taking place.”

“This would be an important opportunity for the pound to rally against the euro and the dollar but we need to be mindful of a potential disappointment too.”

Over in the US, equity markets closed higher on Friday as outperforming results from the large Technology stocks boosted the Nasdaq Composite by more than 2%. Accendo Markets analyst, Mike van Dulken noted “Tech sector strength also lifted the S&P 500 to a fresh record closing high, however results-inspired AT&T weakness spilled over into the wider Telecoms sector, tempering gains.”

“The Dow Jones closed much closer to breakeven in comparison, with Apple and Microsoft strength offsetting a poor session for Merck and Chevron after results.”

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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