By Carla Mozee, MarketWatch
Bank of England cuts GDP forecast
U.K. stocks edged up Wednesday, with shares of brewer SABMiller
PLC among those that moved higher on financial results.
But the British currency was whipped around during the session,
in part after the Bank of England cut its economic growth forecasts
for 2015 and 2016, citing strength in the pound and sluggish
productivity among the reasons for the downgrades.
Sterling: The pound (GBPUSD) late Tuesday climbed to $1.5763 as
the U.S. dollar (DXY) was beaten down following disappointing U.S.
economic data
(http://www.marketwatch.com/story/dollar-on-track-for-worst-day-in-a-week-after-disappointing-data-2015-05-13).
The pound early Wednesday bounced up after monthly U.K. jobs data
came in better than expected, including stronger-than-anticipated
growth in average earnings. Read: U.K. wage growth picks up, job
market strengthens
(http://www.marketwatch.com/story/uk-wage-growth-picks-up-job-market-strengthens-2015-05-13)
But after the jobs data, sterling had been pushed lower when the
Bank of England, in its quarterly inflation report, said it now
expects gross domestic product to expand by 2.5% in 2015, and by
2.6% in 2016. That compares with its previous forecasts of 2.9%
growth
(http://www.marketwatch.com/story/bank-of-england-cuts-uk-growth-forecasts-2015-05-13-54854621)
for this year and next.
The pound is likely to find support near $1.5600 "as the Bank of
England remains among only two G-10 central banks expected to raise
interest rates within the next 6-9 months," wrote Ashraf Laidi,
chief global strategist at City Index, in a note.
Stocks: The FTSE 100 closed up 0.2% at 6,949.63, paring gains.
The London benchmark on Tuesday fell 1.4%
(http://www.marketwatch.com/story/ftse-100-under-pressure-with-easyjet-sliding-2015-05-12),
its biggest decline since late March.
SABMiller (SBMRY) shares climbed 2.1% as the maker of Miller
Genuine Draft, Peroni and other brands said annual net producer
revenue came in at $26.29 billion, up 5% from the year-earlier
period
(http://www.marketwatch.com/story/sabmiller-annual-profit-dips-on-currency-weakness-2015-05-13),
generally in line with analysts' expectations. Profit, however,
dipped to $3.30 billion on currency weakness against the
dollar.
"Trading conditions will continue to be challenging in light of
the significant currency gyrations we can expect to witness over
the coming months," wrote Brenda Kelly, analyst at London Capital
Group. "The increase in the dividend by 8% to $1.13 per share
should help offset any weakness in future capital gains for
investors."
Barratt Developments PLC climbed 3.4% as the home builder said
it expects housing completions for the full year to be ahead of
previous guidance
(http://www.marketwatch.com/story/barratt-sees-housing-completions-to-top-guidance-2015-05-13).
But it was Mondi PLC that zoomed to the top of the FTSE 100,
charging up 8.9% after the packaging and paper company posted a 29%
rise in underlying operating profit
(http://www.marketwatch.com/story/mondi-underlying-operating-profit-rises-2015-05-13)
to 236 million euros ($295 million) during the quarter ended March
31.
Decliners included Admiral PLC , with shares down 1.6%. The
insurer said Chief Executive Henry Engelhardt will step down next
year after 24 years. Chief Operating Officer David Stevens will
succeed Engelhardt.
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