City Watch: Brian Tora on the fall in sterling against the euro.
- Credit: Archant
DESPITE a pretty mixed bag of news, our own FTSE 100 share index has held up remarkably well, but not so sterling which encountered some selling pressure last week after Prime Minister David Cameron’s speech on Europe was postponed.
The pound has now dipped below the 1.20 euro level, leading some forecasters to the conclusion that the euro is now overvalued.
A weak pound is good for exporters, of course, though less kind to holidaymakers. The Japanese yen has been particularly weak of late, but then their economy rather needs the sort of boost a falling currency could generate. And as it happens, lower sterling might well translate into a better performance for our own stock market, given the international nature of many of the largest companies listed here.
We will start to receive the results from those companies enjoying a calendar year end soon, which in the case of the US is the greater majority of them. Wall Street was closed yesterday, but as the week progresses, so the trickle of corporate information will start to turn into a flood. Back home we are in for a rather quieter time, with the highlight this week being the Monetary Policy Committee minutes, due out tomorrow.
We will also have an early estimate of what if any, progress our economy made during the final quarter of last year, but such figures are notoriously inaccurate and subject to later revision.
Still, we do look on track to finish January in a positive mood. As goes January, so goes the year is an old stock market adage. With several major markets having been enjoying a more buoyant start to the year, plenty of investors will be hoping that this much-repeated saying proves correct this time.
: : Brian Tora is an associate with investment managers JM Finn & Co.