UK Economy On the Edge
The latest UK economic data today suggests that the recent optimism we’ve seen might be a little pre-mature. Preliminary quarterly GDP was seen at 0% in Q4, just above the -0.3% seen over the prior quarter. Had the result been negative today, the UK would have been in a technical recession. However, instead, the UK has avoided that situation by the thinnest of margins. For many, this will be a hollow victory and reflects the difficulties facing the UK economy very well. On the monthly reading, UK GDP was seen suffering a sharp 0.5% drop, below the 0.3% decline the market was looking for.
Recession Risks Still There
The BOE has recently warned that the UK stull faces a recession this year, though did say that the downturn would likely not be as pronounced as previously thought. With interest rates at 14-year highs and with inflation still at excessive levels, financial conditions for businesses and consumers in the UK are the worst they’ve been for a generation. However, with the FTSE climbing to fresh record highs this week it’s clear that many players anticipate better times ahead. The fear is that if the BOE pauses hikes at current levels that inflation might rebound near-term, creating further difficulties for the bank.
Technical Views
GBPUSD
The pair currently oscillating around the 1.2195 level, contained within a triangle pattern which has framed the recent consolidation. On the back of the recent uptrend, the focus is on a further push higher and an eventual test of the 1.2659 level next if bulls can get back above 1.2195. Below here, and with momentum studies bearish, risks are skewed towards a break lower and a test of 1.1474 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.