FTSE At Weakest Level Since August 2016

Friday, 21st December 2018

The Bank of England has left interest rates unchanged, following a unanimous decision. The Fed made a similar decision in the United States. The BoE has also trimmed its forecast for the UKs quarterly economic growth for the three months leading up to the end of the year, down from 0.3 percent to 0.2 percent.

The broader economic outlook is going to continue to depend on the nature of the EUs withdrawal. The monetary policy enacted in response to Brexit could go in either direction, according to the BoEs meeting minutes, depending on the shape of the deal, or lack of a deal, for withdrawal.

The broader market tone followed the US stock markets, and the FOMCs moves. Stocks fell to a 15 month low in the United States, and there were similarly heavy losses in the UK. These losses were compounded by disappointing data coming from the Office for National Statistics, which showed that the UKs current account deficit had grown, and that consumers are continuing to spend more than they are earning, which is unsustainable and raises questions about the future of consumer confidence and spending as we head into Brexit. Retail sales did trend up in both October and November, but it is unclear if this could be a longer term trend.

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