This evening at 7PM the Federal Reserve will announce the outcome of their latest monetary policy decision, which will an all likelihood see the central bank keep interest rates unchanged. A 25 basis point hike back in December along with remarks from Chair Powell that gave little suggestion of a more accommodative stance spooked stock markets, sending Wall Street into a tailspin as the market plunged 10% in the days that followed. Since then, Powell has seemingly made a U-turn in his position and the sizable rally in equities seen this month is due in no small part to some reassuring comments from the Fed chair just after the New Year.
The FTSE (UK100 on xStation) is once more back around the 50 day SMA as the market attempts to end the downtrend that has been in place since last May. 6940 remains potentially key resistance. Source: xStation
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Create account Try a demo Download mobile app Download mobile appThis event can have a significant impact on UK stocks and the FTSE is trading higher again heading into it, with the benchmark building on yesterday’s gains and back above the 6900 mark after adding another 70 points this morning. The rally has also received a boost from the pullback in the pound, which is trading a little lower after the latest Brexit developments with the GBP/USD moving below the $1.31 handle and pulling back from close to a 3-month high.
Its over to (E)U
As the dust settles following another day of high drama in the House of Commons, there seems to have been a marked shift in the government’s Brexit strategy. After initially negotiating a deal with the EU and then putting it to parliament in a vote that was comprehensively rejected, it now appears that the PM is looking to try it the other way around, first by receiving parliamentary backing and then seeking EU concessions.
The logic behind this change of course does make some sense, as it transfers the pressure to Brussels from Westminster and could cynically be viewed as an elaborate time-wasting ploy that will ultimately see the PM return to the commons in several weeks time and attempt once more to frame the vote as her deal versus no-deal; only this time around the Article 50 deadline will be drawing ever closer.
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