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The FTSE is down 5 points in early trading this morning as the Pound continues to hold on to it’s 3 month highs against a weaker Dollar.

This morning’s drop might have been more severe were it not for a strong showing from the Retail Sector on the back of an announcement from Next on positive sales in the run up to Christmas, resulting in a 1.5% rise over the period.

“Not that this figure doesn’t carry a few caveats” suggested Spreadex analyst, Connor Campbell, “1.1% of the growth came from new stores, while its Retail division remained in the doghouse, with an admittedly improved 6.1% fall in sales looking all the worse next to 13.6% surge seen in the Directory business.”

However, “there was enough good news for Next to lift its full year pre-tax profit guidance to a new range of between £718 million to £732 million, causing the stock to rocket 9.5% to a £49-crossing 2 month high” he added.

However, a note of caution from Accendo Markets analyst, Mike van Dulken who suggested “management’s update-by-update tinkering of guidance…and sharp share price reactions only goes to reinforce how shareholders remain at the mercy of the UK consumer from one season to the next and exposed to short-termism…And how bricks and mortar retail (-6.1% in 54 days to Dec 24) continues to give way to the internet (+13.6%).”

Undeterred, the Retail sector was lifted with M&S share price up 3.9% and Primark-owner Associated British Foods rising 2.7%.

Manufacturing data out of the Eurozone and UK has helped boost EUR and GBP to near multi month highs against the Dollar. However, todays FOMC minutes and Friday’s employment data may provide some respite for the US currency.

Gold has been a recent beneficiary of the Dollar’s weakness with prices rising to near four month highs. “However, this upward move might be short lived as the global economy continues to grow, global interest rates rise and no major geo-political concerns will take the sheen off investors move into typical safe-haven gold.” suggested FxPro analyst, Edward Anderson.

US equity markets closed higher yesterday, with both the S&P 500 and Nasdaq closing at new all-time record highs. Mike van Dulken commented “Tech lead both indices higher, helping the latter to outperform and climb 1.5%, while the Dow Jones lagged further behind, up 0.4%, as Walt Disney and Apple gains offset a loss for The Travellers.”

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Michael Morton

Michael has worked within the Financial Industry for more than 20 years. Starting out as a financial analyst, he has extensive experience working with fund management groups and brokerages.

With an interest in Stocks and Shares, Funds, ETFs and Commodities, his investment focus is medium to long term gains, with the objective of financial security on retirement, and building wealth for his young children for their adult life. His broker of choice is Hargreaves Lansdown.

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