UK’s central bank might raise rates earlier than expected

Fundamental outlook  

THE Bank of England (BoE) has hinted that it might raise interest rates sooner than expected. The US economy continued to signal growth while Dow markets fell. showed a decline in trade surplus while other economic indicators stagnated.

US services index rose 59.9 in , the highest in months. claims declined to 220,000 in the week ended February 3. Dow Jones performance for the week was the worst in two years after the market moved into a correction from 26,616.

China’s services index grew 54.7 in January, the best recorded in more than five-and-a-half years. Trade surplus grew US$20.3 billion in January, below forecast, after US$54.7 billion gains recorded in the previous month.

China’s consumer prices rose 1.5 per cent in January on a yearly basis while producer prices grew 4.3 per cent from a year ago, both matching forecasts.

Markit in London reported that the services index rose 53 in January, sliding from 54.2 in the previous month. British Halifax home price index slid 0.6 per cent in January after previous month’s revised 0.3 per cent gains.

The BoE said it was likely to raise interest rates sooner and by more than it thought only three months ago, as Britain’s slow-moving economy is getting a boost from the recovering global economy.

Manufacturing production rose 0.3 per cent in December, after the previous month’s revised to 0.2 per cent gains.

British Prime Minister Theresa May visited China earlier this month and secured deals worth more than 9.3 billion pounds (US$13.26 billion), after President Xi Jinping pledged to upgrade their ‘golden era’ relations.

Technical forecast  

/Japanese yen traded in a mild bearish trend last week. This week, the market is resisted at 109.60 area and are prone to further decline as the dollar turns weak. Support is identified at 107.50 region in case of drawdown towards weekend.

Euro/US dollar traded in a small range before the weekend as the dollar slowed down its rise. This week, we reckoned the trend might reverse upwards if the 1.2150 support stayed unbreached.

Mixed sentiment is expected as the range is contained from 1.2150 to 1.24 region.

British pound/US dollar declined at the end of last week. The trend failed to recover despite BoE’s reiteration of an earlier rate hike this year.

This week, we foresee the trend could be sideways with support rising at the 1.3750 area. Resistance is expected to emerge at 1.3395 while the market trades in mixed sentiments.

Disclaimer: This article is written for general information only. No liability by the writer, publisher or any third party involved in the distribution of this work. Dar Wong is a registered fund manager in with 29 years of global trading experiences. You may reach him at

[email protected]

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Source: Borneo Post Online

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