UK100 Sinks on Sticky Inflation
UK100 Analysis
UK inflation has decelerated sharply from its multi-decade highs over a year ago, but today's report showed stickiness. CPI ticked up to 4% y/y in December while Core prices steadied at 5.1% y/y. Tuesday's moderation in wage growth was good news for the Bank of England, but today's data cast doubt on hopes for a pivot and adds to the uncertainty around the policy path. Policymakers have refrained from hiking over the past three meetings, but have not ruled out further tightening as inflation remains far from the 2% target and pointed to sustained restrictive stance.
General risk aversion is witnessed this week, as markets grapple with rate path uncertainty and hostilities in the Red Sea, which affect global shipping times and costs. US Central Command carried further strikes yesterday against Houthi targets yesterday [1] and seized Iranian advanced conventional weapons headed for the militant group [2].
UK100 sinks further today and is now exposed to 7.387, but we are cautious at this stage for a test of the 2023 lows (7,202). The Relative Strength Index points to highly oversold condition, which can contain the fall and give the Index a chance to rebound towards the EMA200 (at around 7,623). Significant improvement in sentiment would be needed for daily closes above it that would pause the bearish momentum and bring 7,795 back in the spotlight.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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