It’s all about the U.K. economy today – Market Overview

It’s all about the U.K. economy today – Market Overview

U.K. retail sales data for April shoots up 9%, compared to the numbers recorded for March.

This figure confirms the high degree of recovery of the British economy thanks to the success rate of vaccines administration, allowing for restrictions to end and life to return to normal.

U.K.’s Retail Sales data contrasts with Germany’s Manufacturing PMI report for May, which failed to meet expectations showing a figure of 64.0, down from 66.2.

This difference in both expectations and economic data between the United Kingdom and Europe could lead to different behaviours of their respective central banks regarding monetary policy decisions.

While the Bank of England has already spoken openly about the need to initiate the reduction process in its asset purchase program, the European Central Bank appears to be far away from such a moment. In addition, the ECB faces the danger of rising U.S. Bonds Yields, which could drag their European counterparts up, something that it will try to avoid at all costs with its bond purchases.

Consequently, the difference in interest rates between the United Kingdom and Europe will widen in favour of the British, which is one of the main factors affecting the Euro price.

The British pound has had a positive performance so far this year. If the scenario described above occurs, this upward trend will probably continue, especially against the euro.

The EUR/GBP pair shows us that after an upward correction of the main downward trend, which began earlier this year, it has a resistance level at around 0.8700 and main support at 0.8478. Below this level, it would make its way to lower targets around the 0.8300 zone.

This better performance of the British economy, with optimistic expectations about its evolution in the short and medium-term from most market analysts, is reflected in the performance of the British FTSE 100 index.

In the daily chart, we observe a well-defined bullish channel that is still active without signs of exhaustion. The RSI is in the zone still below the overbought levels, with a support and pivot level below the bullish channel and marked by the 100-day line SMA that is now located in the 6745 area, still far from the current trading levels.

Sources: F.T., WSJ.

Informațiile prezentate în acest document sunt pregătite de Miguel A. Rodriguez și nu au intenția de a constitui consultanță pentru investiții. Informațiile din acest document sunt furnizate drept o comunicare generală de marketing cu scop informativ și, ca atare, nu au fost pregătite în conformitate cu cerințele legale concepute pentru a promova cercetările independente în domeniul investițiilor și nu sunt supuse niciunei interdicții de abordare înainte de diseminarea cercetărilor de investiții. Nu au în vedere obiective specifice de investiții, situații financiare sau nevoi specifice ale vreunui destinatar.

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Key Way Investments Ltd nu influențează și nici nu are vreo contribuție la formularea informațiilor conținute de acest document. Conținutul acestui document este generic și nu ia în considerare circumstanțele personale ale fiecărui individ, experiența de investiții sau situația financiară actuală.

Prin urmare, Key Way Investments Ltd nu va accepta nicio responsabilitate pentru eventualele pierderi ale traderilor datorate utilizării sau conținutului informațiilor prezentate în acest document. Performanța din trecut nu este un indicator viabil pentru rezultate viitoare.