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British Pound (GBP), FTSE 100 Latest: Return of Inverse Correlation

British Pound (GBP), FTSE 100 Latest: Return of Inverse Correlation

Martin Essex, MSTA, Analyst

GBP price, FTSE 100, Brexit news and analysis:

  • GBP/USD continues to fall, with an important support level now being challenged.
  • At the same time, the FTSE 100 is stable to higher.
  • That suggests the inverse correlation between the two has returned, with falls in GBP tending to benefit the major London stocks.

GBP/USD falling, FTSE 100 holds its ground

GBP/USD remains under downward pressure as market sentiment suffers from coronavirus fears in South Korea and Japan, and is now challenging support from a trendline joining its recent lower lows that has been in place since late last year.

GBP/USD Price Chart, Daily Timeframe (November 21, 2019 - February 20, 2020)

Latest GBP/USD price chart.

Chart by IG (You can click on it for a larger image)

For a while it looked as though GBP/USD and the FTSE 100 index of leading London-listed stocks were falling in tandem as the coronavirus outbreak pushed investors to move out of riskier assets into safe havens. This was unusual as a weaker Pound tends to help the international companies that are plentiful in the index and therefore give it a boost.

Now though, as GBP/USD falls, the FTSE 100 looks to be recovering, suggesting that the old relationship has returned and that if GBP/USD breaks lower the FTSE 100 should benefit.

FTSE 100 Price Chart, Daily Timeframe (November 21, 2019 - February 20, 2020)

Latest FTSE 100 price chart.

Chart by IG (You can click on it for a larger image)

Meanwhile, EU leaders are meeting in Brussels this week to discuss the bloc’s Budget plans post Brexit. The UK’s departure has left a hole of about £9 billion, suggesting that spending will have to be curtailed.

We look at Sterling regularly in the DailyFX Trading Global Markets Decoded podcasts that you can find here on Apple or wherever you go for your podcasts

--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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