UK100 Constructive as Bank of England Stands Pat

  • UK100
    (${instrument.percentChange}%)

UK100 Analysis

Inflation in the UK fell to 2% y/y in the UK as Wednesday's data showed, but that was not enough to force the central bank into a cut, while the upcoming July 4 general elections were a deterrent. Policymakers kept rates at 5.25% for seventh straight time as the still expect inflation to pick up in the second half and not fall below the 2% target for another two years [1]. The services components is sticky while wages remain historically elevated. At the same time, the troubled economy exited its brief recession and better days are ahead.

Despite staying on the sidelines, officials have pointed to a less restrictive stance ahead, as price pressures have abated. Two officials again voted in favor of a cut, while the decision to hold was "finely balanced" for some members.

UK100 is having a great run this year that culminated in May's all-time highs. Election uncertainty and BoE apprehension leads to a losing month though. This creates risk for deeper correction towards 8,041, although further weakness does not look easy under current conditions.

However, today's outcome keeps the BoE on track to cut in August and the end of the prolonged tightening cycle supports the stock market, along with improving economic conditions. Talk of Shein's London listing, in what would be blockbuster IPO, also helps sentiment after the loss of Arm last year.

Trade the News: View our Economic Calendar

UK100 found support by the daily Ichimoku Cloud and reclaims the EMA200 (black line), This gives it the opportunity to set new June highs (8,369) and push for new records.

Nikos Tzabouras

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.

References

1

Retrieved 19 Jul 2024 https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2024/june-2024

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.