Spreadex Market Update
Pound plunges ahead of Bank of England financial stability report
Slipping around 10 points the FTSE is back hovering just above 6500 after briefly grazing 6600 during Monday’s trading; the pound, meanwhile, has plunged by almost 1% against the dollar. How the pair perform this Tuesday will likely be down to the state of its services PMI and what kind of tone is struck by the Bank of England with its financial stability report.
In terms of the latest services reading analysts are expecting a slide from 53.5 to 53.1 month-on-month, though that fall could be far sharper if yesterday’s woeful construction PMI is anything to go bar. Meanwhile focus will likely more be on Mark Carney’s post-report speech than the financial stability results themselves, with some thinking that the Bank of England chief could use this opportunity to announce measures that relax the amount of capital banks have to hold.
Looking in worse shape than the FTSE the DAX and CAC both slipped by nearly 1% as Tuesday got underway. Like its UK peer the Eurozone will be looking to see the effects of the referendum run-in on its services sector. Spain is expected to have seen another decline month-on-month, while France should remain stuck in contraction territory; Italy, however, is forecast to bounce back above 50, while the Eurozone as a whole could also see an improvement.
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