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UK – Confidence and the Deficit both down

Market Analysis
2016-06-30_12-36-05

GBPUSD, Daily         

UK consumer confidence has fallen sharply since the Brexit vote, according to a timely survey by YouGov/CEBR which put confidence at its lowest since May 2013. It’s confidence reading fell to 104.3 in the days after June 23, down from 111.9 for the first three weeks of June. Both the BoE and the UK Treasury had forecast risk of recession in a Brexit scenario. BoE Governor Carney will be speaking at 15:00 GMT (4 pm London time today).

The United Kingdom’s (UK) current account deficit was £32.6 billion in Quarter 1 (January to March) 2016, down from a revised deficit of £34.0 billion in Quarter 4 (October to December) 2015. The deficit in Quarter 1 (January to March) 2016 equated to 6.9% of gross domestic product (GDP) at current market prices, down from 7.2% in Quarter 4 (October to December) 2015, which remains the largest proportion since quarterly records began in 1955.  The current account is a broad measure of the UK’s financial position in relation to the rest of the world and includes trade and investment flows.

This smaller than expected fall, emphasizes how dependent the UK is on overseas investment and borrowings. These invest flows could come under significant pressure if the UK leaves the EU. Uncertainty continues with markets looking for direction and new price levels.  EURGBP is trading at 0.8260 and GBPUSD at 1.3460 with 1.3500 and 1.3575 key resistance levels.

 

 

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Stuart Cowell

Market Analyst

HotForex

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