Friday, April 19, 2024

UK Prime Minister Opens Up the Country – How are financial markets reacting?

Although total active cases in the UK have been rising since May, reaching worrying levels, the country decided to remove economic restrictions, and now there are increased expectations for a rebound in GDP figures. At the same time, another important aspect to monitor is how financial markets are reacting to the developments, in particular, the Pound and the FTSE 100, the benchmark index of the London Stock Exchange.

UK lifts restrictions despite rising COVID-19 cases

A temporary peak in active COVID-19 cases seems to have been reached on July 17th, when the UK reported more than 50,000 cases. That came close to the January peak, as the Delta variant, a more contagious strain of the Coronavirus, is now spreading and accounts for the majority of new cases.

Lifting restrictions given these developments was criticized by numerous experts, yet the government chose to move ahead on the reopening path. Now that new cases are falling, that could be seen as a good move, even though complacency would not be appropriate.

Local stock market still underperforming

When it comes to the pound, the British currency has been steadily rising against the USD since March 2020. The trend is still in place, even though a setback occurred, on the back of interest rate hikes expected in the USA.

The FTSE 100, on the other hand, is one of the worst-performing stock market indices among developed countries, since it did not manage to overcome the January 2020 high. The sluggish recovery raises questions about the near term and leaves the index vulnerable in the face of rising uncertainty.

The need for diversity is still valid

Given such poor developments in the local markets, traders and investors need to continue looking at alternatives. Brokerages with diversified asset coverage can be a good choice, and Trustpac is currently one of the options on the table.

Since Trustpac understands the market, it offers access to CFDs based on currency pairs, stocks, indices, commodities, and even cryptocurrencies. A trading account with this brand is affordable for a variety of traders, mainly due to the low initial deposit requirements.

Also, the abundance of online trading information made available by Trustpac enables customers to constantly learn about the markets and stay updated with some of the latest market news. If UK stocks are underperforming other developed markets, traders working with Trustpac can trade on popular US stocks like Apple, Amazon, Google, or Microsoft, which have all been posting solid returns over the past several months.

With so many different alternatives, UK residents are not limited to local assets and can take advantage of the opportunities emerging abroad. Despite the economic reopening process, the recovery is expected to encounter bumps along the way.

Rising inflation on the back of supply bottlenecks can dampen consumer confidence, something that’s already happening in the US. The way out of the COVID-19 pandemic will stretch over several years and in the meantime, challenges will need to be faced.

Sam Allcock
Sam Allcock
Sam heads up Cheshire-based PR Fire, an online platform that has already helped over 10,000 businesses to grab widespread media coverage on their news at an extremely accessible price point.

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