UK Economy Faces Pressure as Sterling Weakens and European Markets Slide
The latest economic data provides few signs of relief for the struggling UK economy, increasing pressure on both the Bank of England and the government to introduce support measures. Chris Beauchamp, Chief Market Analyst at IG, commented:
“This morning’s data provides little in the way of good news for the struggling UK economy, and puts more pressure on the Bank of England and the government to act to provide more support. Sterling looks at the mercy of continued US dollar strength, both from a data outlook and as short positioning in the greenback continues to unwind.”
In early afternoon trading, London’s FTSE 100 (^FTSE) slipped 0.4%, with mining companies among the leading decliners. The European markets followed suit, as Germany’s DAX (^GDAXI) fell 1.2% and Paris’ CAC 40 (^FCHI) dropped 0.9%. Meanwhile, the pan-European STOXX 600 (^STOXX) lost 0.8%.
Across the Atlantic, Wall Street is poised for a negative open, with S&P 500 futures (ES=F), Dow futures (YM=F), and Nasdaq futures (NQ=F) all trading lower.
Currency markets reflected the growing concerns, as the pound slipped 0.5% against the US dollar (GBP/USD) to 1.3270, highlighting the ongoing strength of the greenback and the market’s cautious sentiment.
Traders and investors will be watching closely for any interventions from the Bank of England or government stimulus measures that could stabilise the pound and support the wider market.
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