8th February 2019
The UK economy faces its worst growth since the financial crisis as the “fog of Brexit” paralyses businesses and consumers, the Bank of England has warned. The Bank’s rate-setters left interest rates unchanged at 0.75pc and cut its 2019 growth forecast to 1.2pc from 1.7pc, the worst rate of expansion since 2009. It blamed mounting Brexit uncertainties and slowing global growth for the downgrade.
Governor Mark Carney said that the “fog of Brexit” is causing volatility in economic data and “tensions” in the economy and financial markets. Growth would accelerate with a soft Brexit or further clarity on a deal, he added. Mr Carney warned that a no deal Brexit “shock” would increase the possibility of growth contacting but added that the financial system will “cushion the blow” from a disorderly departure.
The Bank’s rate-setters said that the “outlook for growth remains highly sensitive to the effects of Brexit”.
Sterling initially slipped on the gloomy forecasts before rallying strongly after Mr Carney said that growth would rebound in a soft Brexit, boosting hopes on markets of a rate hike. After sinking as much as 0.8pc versus the dollar to $1.2854, it recovered to a 0.4pc gain at just below $1.30.
Trump Won’t Meet Xi Before Deadline
President Donald Trump said he won’t meet Chinese President Xi Jinping before a March 1 deadline to avert new U.S. tariffs on Chinese goods. Trump responded “No” Thursday when reporters at the White House asked him if he would meet with Xi this month. But he added that the two would “maybe” meet later. Trump’s economic adviser Larry Kudlow said earlier at the White House that a Trump-Xi summit was “off in the distance” but that he remained confident the two leaders would still meet at some point.
Stocks Fall on Trade Concerns
Asian stocks traded negatively with global risk appetite subdued by growth concerns and after trade-related fears resurfaced, following a slide in U.S. stocks that deepened as investors grew anxious the Trump administration won’t reach a trade deal with China before a March deadline for escalating the war. Futures pointed lower in Japan and Australia, with Hong Kong ready to reopen after a three-day holiday. The dollar held gains and the yen ticked higher. The 10-year Treasury yield slipped to 2.66 percent. With Hong Kong traders back at their desks Friday and mainland China returning from holidays Monday, volumes will be ramping up again just as global growth concerns are resurfacing. The European Commission made sweeping downward revisions to most of the region’s major economies, the Bank of England said it expected the U.K. economy to grow at its slowest pace in a decade and Australia’s central bank earlier in the week acknowledged increased economic risks domestically and abroad. Elsewhere, crude slumped below $53 a barrel in New York and gold edged higher.
FTSE 100 Trading Signals, Forecast and Prediction
Shame that we just missed the 7192 short order yesterday and we dropped off pretty well from the 7188 level in the end. Overnight the FTSE 100 has remained around the 7100 area, and the support at 7090 remains in tact for now. Should this break the bears will be targeting 7073 where we have a fib level, and then the daily support area at 7050 below that. We also still have the daily support at 6954 currently from the moving average and we may well see a test of this area within the next few sessions. It’s a level that may well hold ready for another push up past 7200.
I am thinking that if 7050 breaks then it does make things look more bearish and that daily support looks more likely.
On the bullish side today if 7090 does hold initially we should see a rise towards the daily pivot at 7126. I have gone for a tentative short here in the plan but with a tight stop, planning for a drop down to 7070 and 7050. Should the bulls break above the 7126 though then we should see a rise towards the fib level at 7170, and also the 2 hour coral line at 7172. Worth. short at this level too Above this then we have the recent high and resistance still at 7192. 7235 is still showing above this as it has done all week and the bulls will be keen to break above this.
Slightly more cautious today as its a Friday and watching the 7090 and 7050 levels for support today. The 2 hour chart remains bearish with the 7192 resistance level.
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