The FTSE 100 is expected to open around 15 points lower, according to spread betting firms, as global markets respond to rising political tensions surrounding US monetary policy. Nevertheless, the index is projected to remain above the 10,000 mark following last week’s strong performance.
Asian equities advanced on Monday in line with recent gains on Wall Street, although overall sentiment remained cautious. Investors are assessing reports that the United States Department of Justice is investigating the Federal Reserve, raising fresh concerns about the independence of the central bank.
Federal Reserve chair Jerome Powell confirmed the existence of the investigation and criticised it as an unprecedented escalation of political pressure from Donald Trump, who has repeatedly called for further interest rate cuts. Mr Powell stated that the inquiry relates to his Senate testimony concerning a renovation project, but warned that the move risks undermining confidence in the integrity of monetary policy decisions.
The US dollar continued to fall on foreign exchange markets following reports of the investigation. The dollar index, which measures the currency against a basket of peers, was down 0.2% in early trading. This weakness provided support for sterling, with the pound rising by nearly half a cent to $1.3440. The decline in the dollar underscores growing concerns among investors that the independence of the Federal Reserve may be under threat.
Markets reacted swiftly to the developments. Gold surged to a fresh record near $4,600 an ounce, while silver climbed towards $85, as investors sought safe-haven assets.
The US dollar weakened and government bond prices also came under pressure. Analysts noted that market participants appear less concerned about the substance of the investigation than about the broader risk of political influence encroaching on rate-setting. Oil prices edged higher, supported by ongoing unrest in Iran, adding to an already fragile geopolitical backdrop.
