The FTSE 100 started out in the red due to the strength of sterling, but swung into positive territory after the pound softened as the UK inflation rate dropped last month.

The London equity benchmark is very sensitive to shifts in sterling and today’s move highlights the relationship between the two.

Eurozone equity market have been hit by the rally in the euro, the single currency is above €1.15 and the DAX and CAC 40 have suffered for it.

British Land shares were boosted this morning by the company’s £300 million share buyback scheme. The real estate investment trust (REIT) believes the best value out there is it owns stock, and it is a convenient way to utilise excess cash.  

Carillion shares are up 11% today after the company was awarded two government contracts a total of £158 million.  The stock surged yesterday after it revealed it won a contract in relation to the HS2 project. The timing of these contracts bodes well for Carillion, after the company’s value collapsed last week due to a profit warning, its dividend being suspended and the departure of its CEO.  

The US dollar dived overnight as Donald Trump couldn’t get enough votes from his own party in order to bring in the healthcare reforms he wanted. This makes Mr Trump look weak because even Republicans won’t support his policies, and it make traders wonder what else they won’t support. President Trump hopes to introduce tax reform, infrastructure projects and reduce banking regulation, and now trader’s fear his plans could be scuppered.   

The GBP/USD rallied overnight on the back of the weak dollar, but sterling quickly sold-off after the UK revealed inflation that missed expectations. British CPI fell to 2.6% in June, while traders were expecting it to remain steady at 2.9%. Dealers were quick to dump the pound after the positive run overnight.

Mark Carney, The Governor of the Bank of England, will unveil the new £10 note at 2.30pm today. Dealers will be paying attention to what Mr Carney says in case he drops clues about monetary policy.

The weakness in the US dollar and the volatility in European equities has made gold more attractive today.    

We are anticipating the Dow Jones to open 15 points higher at 21,644, and we are calling the S&P 500 up 2 points at 2461.

At 3pm the US will release the National Association of Home Builders (NAHB) for July, and the market is expecting the reading to remain unchanged at 67.

Bank of America and Goldman Sachs will report their second-quarter results today.   

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