After Weeks of Turmoil, UK Markets Face Another Test on Monday Afternoon
Investors are bracing for a test Monday after markets in the UK have been volatile over the last few days.
The FTSE 100 closed down 0.5 percent on Friday, marking the second consecutive decline on the day as markets are weighed down by a number of issues, most notably the pound.
The pound is currently trading between $1.300 and $1.320, a level not encountered since November 2017. The strong pound makes imports more expensive for customers in the U.K., pushing up prices on their goods and prompting an increase in inflation. This has caused the Bank of England to increase interest rates to a record level.
The FTSE 100 Index is currently trading around 6,360 euros.
The Bank of England has also announced that it will be raising rates from a record low of 0.75 percent to 0.5 percent — a record low for the U.K. — this month. The Bank of England also raised rates in September to a record low of 0.25 percent. The central bank has said that raising rates in both instances will have economic benefits for Britain.
On Sunday, the Bank of Japan surprised markets with its decision to keep rates at zero. The central bank cited a low level of inflation as a primary reason why it did not lower its key rate.
With markets closed Sunday, London’s two main stock markets — the FTSE 100 and the FTSE 250 — will be closed. The FTSE 100 has now fallen a record six consecutive days.
The Bank of England will be announcing the decision on interest rates, with rates in both the U.K. and in the U.S. due to be released on Monday morning.
Markets will be open this Monday, although it is unlikely that there would be any trading activity before then.
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