Home Business NewsBusiness Pound steadies as FTSE 100 ticks up

Pound steadies as FTSE 100 ticks up

by LLB Reporter
27th Sep 22 10:55 am

It felt like the calm after the storm on Tuesday morning as sterling stabilised and the FTSE 100 made modest progress.

However, the risk of another squall looks high as new Chancellor Kwasi Kwarteng prepares for what could be an interesting meeting today with big bankers. Mortgage lenders pulling products from the market was an inevitable consequence of a lack of visibility on interest rates.

There is an advantage of the Bank of England not moving on rates just yet. Conditions have been so febrile that it risked an emergency rate hike failing to make any impact on the direction of the pound – the equivalent of turning up to gunfight with currency traders with a banana in the holster.

AJ Bell investment director Russ Mould said: “Governor Andrew Bailey and his colleagues will hope that allowing things to calm down first will allow any action they eventually take to have a tangible impact on markets.

“There has been at least an attempt at some co-ordinated action between the Treasury and the Bank of England to reassure investors that these situations often take on a life of their own amid continued speculation the pound might hit parity with the dollar and even the euro.

“Questions about the long-term implications of the events of the past few days might have to wait for now. Downing Street, Threadneedle Street and almost any street with mortgage holders will be crossing their fingers things don’t get any worse.

“One thing to watch closely is any attempt by overseas predators to take advantage of the weakness in sterling to buy UK plc on the cheap – something which happened after the Brexit vote in 2016 and during the Covid-19 pandemic.”

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