Slow and Steady Growth Keeps Pound Afloat
Today’s Spotlight Market
In many ways, the UK economy is mirroring the economy of the United States. Unemployment is falling, inflation remains low, and economic growth is slow, but steady. Housing prices continue to be an issue throughout the UK, especially in the expensive London region. Finally, the possibility of a British exit from the European Union continues to linger in the background.
Fundamentals
The FTSE 100 wasn?t immune to the global market turmoil of January 2016. However, the FTSE began 2016 at a level of 6093 and ended on January 29 at 6083, almost unchanged for the month. That is in sharp contrast to the US equity markets which finished January down about 5%. The US unemployment rate is at 5%, while the UK?s rate is at 5.2%. Both counties continue to have tightening employment, but without a large corresponding increase in wages, reducing the potential for wage push inflation. The Bank of England has kept interest rates at .5% for 82 months, and there is no sign that they are likely to raise rates anytime soon.
Technical Notes – View Today’s Chart
Turning to the 3-month continuation chart, we see a neutral to bearish short-term trend for the British Pound. The 20-day Simple Moving Average (SMA) has been providing resistance. The 20-day SMA is also below the 50-day SMA and the two moving averages are diverging.? 14-day Relative Strength Index is a neutral 42.82.
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