The Index rallied at the first half of Q1 and set record highs, but heads towards the conclusion of a losing month, during which it had to grapple with many adverse news. Other the banking turmoil sparked by the collapse of SVB in the US, inflation CPI inflation re-accelerated in the UK to 10.4% y/y, stopping a three-month declining streak.
This hot CPI report pushed the bank of England to another rate increase this month, by 25 basis, which marked the eleventh straight hike since the December 2021 lift-off . In typical BoE fashion, there were two dissenters in favor of a hold and communication was once again unclear, with policymakers not shutting the door to further tightening.
In any case, the BoE appears to be close to the terminal rate (if not already there) and fears over the financial system ebb, while the UK banking system is in "a strong position both capital and liquidity-wise" according to Governor Bailey . Meanwhile, today's data showed that the UK economy grew by 0.1% q/q during the fourth quarter, in a slim, but welcome expansion compared to the 0.0% preliminary figure.
UK100 runs a two-week rebound from the 2022 lows earlier this month, trying to retake the EMA200 (black line) and step into the Daily Ichimokou cloud. Successful effort would bring 7,850 in its crosshair, although it does not yet inspire confidence for challenging this year's highs (8,052).
Despite the recent surge, there is still uncertainty and as long as it stays below the EMA200, UK100 is exposed to 7,420, although persistent risk aversion would be need for the 2023 lows to be tested (7,202).
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Retrieved 31 Mar 2023 https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2023/march-2023
Retrieved 03 Dec 2023 https://committees.parliament.uk/oralevidence/12933/pdf/