3rd May 2019
- Bank of England votes to leave interest rates at 0.75pc
- Bank now expect growth of 1.5pc in 2019, up from previous forecast of 1.2pc
The Bank of England expects the UK to accelerate in 2019 following its slowest growth in six years as the world economy stabilises and Brexit worries fade. The Monetary Policy Committee upgraded its forecasts for the UK economy, predicting that growth will edge higher to 1.5pc in 2019, up from 1.4pc last year and February’s forecast of 1.2pc.
The Brexit gridlock forced the Bank’s rate-setters to unanimously vote to hold interest rates at 0.75pc. The MPC said that pre-Brexit stockpiling lifted growth to 0.5pc in the first quarter but the boost will be temporary with the economy slowing again in the second quarter. Governor Mark Carney said that global growth will enjoy a “modest pick-up” as cooling trade tensions and easing financial conditions alleviate the pressure on businesses.
The FTSE 100 hit the 7395 resistance area and promptly recoiled, steadily declining during the afternoon towards the 7330 level again. The bulls had put up a brave fight initially, defending the 7350 level, despite the spike down to 7338 in early trading. The failure to test the 7420 resistance area suggests that the bears remain in control for the moment.
Trade Talk
Presidents Donald Trump and Xi Jinping will decide after next week’s trade talks whether they’ll meet to finish the deal, White House spokeswoman Sarah Sanders said, adding that the U.S. believes such a summit is likely. The Communist Party-backed Global Times wrote in an analysis that many observers wonder if the process has hit an impasse, given the lack of details from this week’s meetings.
Mixed Markets
Stocks in Asia were mixed as U.S. equities fell for a second day after the Fed did little to encourage rate-cut talk and amid concerns that a trade deal with China remains elusive. Treasuries dipped, while the dollar gained against every G-10 counterpart. Oil tumbled to its lowest in a month. Volumes may be light with markets in China and Japan remaining closed, as futures pointed to a lower start for stocks in Hong Kong and modest gains for equities in Sydney.
FTSE 100 Trading Signals, Forecast and Prediction
It’s Non Farm Payrolls today, released at 1330 and will be closely watched so expect a reaction in the markets at that time. This is the monthly change in employment excluding the farming sector, and the forecast is 190k versus 196k last month. It is considered the most comprehensive measure of job creation in the US.
We have bounced back from the low yesterday and are back above the 7350 level this morning following a mixed Asian session. The bulls will be keen to break above the 7393 level where we have resistance for today, however to invalidate the bearishness they will need to break above the 10 day Raff channel top, which sits at 7428. I am expecting a bit of an initial drop down at the open, probably towards the 7340 level where we have coral support on the 30min chart to start with. A break of 7338 though and we will likely see the 7311 level, where we have a key fib for today. 7321 was yesterday’s low also, so we may see a retest of that level later on, especially if the market reacts poorly to the NFP data. Below the 7311 level and I can see a decline down towards the 7285 and possibly the 7250 area.
If the bulls were to push past the 7430 level today then the bigger picture is still showing those higher resistance levels at 7529 and 7562. The 2 hour chart however remains negative, and the coral is also showing resistance at the 7394 level. Initially the bulls need to break above the 7363 level which is where we are as I write this. This is resistance hence thinking that we get an initial pullback first thing.
If the 7340 long order isn’t tagged this morning then I will remove it prior to NFP.
So, watching for a rise to 7395 again, and then another dip from there, but bear in mind we may well get to 7425 or thereabouts too.
Have a great weekend. UK markets are closed on Monday.
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