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Should You Buy FTSE 100 Ahead of UK CPI and BOE Decision?

  • The FTSE 100 retreats ahead of the UK’s inflation data.
  • The BoE (Bank of England) will announce its rate decision tomorrow (Wednesday).
  • Also, the index will respond to the coming FOMC decision.

The FTSE 100 stayed under pressure today as market players waited for the upcoming interest rate move by the Bank of England and the United Kingdom’s inflation stats. While writing these lines, it traded at 7,460 pounds – some points beneath this month’s peak of 7,630.

BoE Decision & UK Inflation

The FTSE 100 will remain in the limelight this week amidst the scheduled macro events. Meanwhile, the Fed Reserve will finalize its 2-day conference on Wednesday. Analysts expect the Fed to execute a 50bp rate hike after increasing by 75bp over the last four meetings.

Fed Chair Powell may offer hints about Fed ensuring elevated rates in 2023. He fears introducing a dovish stance amidst slow economic growth will heighten inflation. Fed moves tend to affect the FTSE 100 index & other global indices such as Hang Seng and Dow Jones.

Moreover, the FTSE 100 will respond to the latest inflation data from the United States and the United Kingdom, scheduled for Tuesday & Wednesday. Analysts expect a diverged inflation in the two nations. They expect a decline in the headline CPI from October’s 7.7% to November’s 7.3% (in the US).

Meanwhile, analysts expect the United Kingdom inflation stayed within the double-digit territory in November. Consequently, they expect the Bank of England to hike by 50bp or 75bp. Moreover, it will hint that the BoE will maintain steady rates in the coming year.

The leading FTSE 100 components to ponder before the Bank of England decision include banks like Barclays, NatWest, and Lloyds. A hawkish BoE stance may see these banks performing well. Remember, banks make more cash during high-interest rates.

FTSE 100 Prediction

The 4-hr chart indicates that the index pulled back over the last few days. That has seen the Footsie retreating beneath the crucial support at 7,520 pounds – 13 September highest mark. The index has dropped beneath the 25-d and 50-d Moving Averages, whereas the RSI nears the oversold mark.

Thus, the index can retreat for some time before resuming upside trends. Such developments will open the gates toward the crucial level of 7,600 pounds.

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