FTSE Opens Lower in Mixed Trading as Inflation Fears Rise

The BoE MPC member Mann said that the central bank should put cutting rates on hold, Fed chair Powell also made similar comments about US monetary policy at the Dallas Fed meeting.

• BoE sees upside risk to inflation
• Powell cools hopes for rate cut in December
• UK GDP grows less than expected

The FTSE is trending lower, down 0.30% in mixed trading, with hopes for quick rate cuts dissipating. The BoE sees inflation risks rising as Trump is set to take the White House in January.

An MPC member, Catherine Mann, at a conference of Britain’s Society of Professional Economists, made the following statement:

“The latest political developments across the Atlantic have not made a disorderly trade scenario less likely, which would have consequences for output and inflation in the UK,”

The comment is in reference to the likely trade tariffs the Trump administration could impose on the UK as well as others. Mann believes this scenario would cause an upward bias to inflationary pressures.

Fed chair Powell also made comments on the risks of inflation. Stating that current inflation is above the 2% target, and job and GDP growth are both strong. Adding that the Fed can deliberate carefully on the pace of rate cuts.

UK GDP Growth reported a lower-than-expected rise for Q3 and contraction in September. The monthly growth rate dropped 0.1% and the quarterly growth rate rose by 0.1%. A sharp decline from 0.5% growth in Q2.

Technical View

The day chart above for the FTSE shows a market that is a bearish trend with prices below the Ichimoku cloud. However, the market needs a close below the close of the last dip on August 5 at 7,995 (black line) to clear a wide sideways range.

The FTSE broke below the cloud 5 candles back, and found support on the 7,995 level, which remain the immediate support. Further support will come from the dip of 7,910 (grey line), which led to a major reversal.

A correction from here is possible, however, I see more downside risk if today’s candle closes red. To the upside, the market will find major resistance at the bottom of the cloud at 8,164.