It’s been a relatively quiet week for UK stocks so far and while there is much that can happen before this afternoon’s close the FTSE 100 looks set to end it little changed from where it began. Overall it’s been a positive week for the pound thus far, with gains seen against all of its major peers. The largest appreciation has come against the Japanese Yen, but there have also been solid gains against the US Dollar and Swiss Franc.
Consolidation for UK equities after recent declines
A weekly range of around 100 points or not much more than 1% reflects this period of consolidation which could be deemed positive or negative depending on how you view it. This is even more clear if we look through the noise and focus just on closing levels with the four ending prices for the FTSE so far this week all coming within a 35 point, or roughly 0.5% range. From the negative perspective the recent price action may well be a pause after the recent declines as a bear flag of sorts forms, with a break below the lows of 7220 opening up the possibility of another sizable leg lower. On the other had, bulls may well see this as a bottoming out process and so long as the the 7220 region isn’t broken below then a recovery may lie ahead.
Carney delivers no-deal Brexit warning
Mark Carney is risking the ire of hard Brexiteers once more this morning as the Governor for the Bank of England (BoE) has warned that a no-deal Brexit could lead to economic chaos which would see house price crash by as much as a third. On the flip side, Carney also noted that PM May’s much maligned Chequers exit plan, should it manage to be agreed upon, would see the economy perform better than the bank’s assumed outcome. Brexiteers have often criticised Carney for his views on post-Brexit Britain citing his forecasts are doom mongering and part of a greater “project fear”. However, his stance is in keeping with the vast majority of leading economists and while he is supposed to be apolitical in the role, it would be remiss of him not too comment on what is clearly the largest determining factor for the UK economy for the foreseeable future.
Carney is speaking in Dublin at the moment, but his comments seem to be pretty much a copy and paste job from yesterday’s BoE statement after the bank kept policy unchanged with the overall tone fairly balanced.
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