2016-11-03 11:49:52

Unexpected case that a candidate for the US presidency Hillary Clinton used personal email address for official communication has increased supporters of the other candidate Donald Trump. The USD and the American stock indices have dropped on this news. Major world indices followed the example of the American indices. Demand for gold and other safe-haven assets, such as the Yen and Franc, has grown. Spot-price of gold has exceeded $1300.00 per ounce on the uncertainty about the outcome of presidential voting in the USA.

Yesterday the US Fed left short-term interest rate unchanged and gave new indications that monetary policy tightening in December is likely to take place. Official Fed’s statement stated that although inflation in the country is increasing and economy is improving the Fed decided to wait for the additional signs of improvement in the American economy.

Fed's decision to keep the rate unchanged one week before the presidential election on November 8 was expected by investors. According to CME group, probability of the rate hike in December is now at the level of 72%.

High probability of the rate hike in the USA in December will add pressure on the US stock market.

The index FTSE100 of the London stock exchange, which had steadily grown after the Brexit referendum in June, was at the negative territory at the beginning of this month. The index FTSE100 has dropped by 2.0% and is traded at the level of 6830.00.

According to the data released last week, British GDP has grown by 0.5% in Q3 exceeding the forecast of +0.3%. On the annual basis GDP has grown by 2.3% against the forecast of 2.1%. Therefore, the British economy keeps up momentum and the growth pace in Q3 was equivalent to the pace in the previous 4 quarters. Country's GDP now is at the level of 8.2% which is higher than the peak in GDP recorded before the global financial crisis.

However, according to many economists, positive economic data will have limited impact on the pound due to the political uncertainty caused by Brexit and economic growth in Q3 was largely due to the activity in the services sector, while agricultural, manufacturing and construction sectors have decreased.

In the result of negative processes associated with the Brexit, the inflation rate in the UK may rise substantially and more rapidly than expected by the Bank of England. The British economy stayed afloat after Brexit; however, it is likely that economic growth in the UK will slow down compared to the first 6 months of this year.

Today important British news will be released as follows: at 15:00 (GMT+3) interest rate decision by the Bank of England. It is likely that the rate will remain at the current level of 0.25%.

Monetary policy report with the results of the rate voting and other issues and the Bank’s comments on the state of the economy; Minutes of the meeting of the Monetary Policy Committee of the Bank of England with the results of the rate voting.

The main risks caused by Brexit are possibility of slowing down in economic growth and a large deficit of the current payment balance. However, positive GDP, which was above expectations, has reduced the likelihood of monetary policy easing by the Bank of England.The improvements in the British economy and steady economic growth after Brexit make it difficult to predict future actions of the Bank of England, which gives plenty of chances in the Pound trading before the release of the Bank’s decision and the press-co9nference. A speech by Mark Carney, the head of the Bank of England is scheduled for 15:30. Market participants expect that he will give clarification on further policy. Volatility during his speeches usually sharply goes up in the pound and the index FTSE100of the London stock exchange.

FTSE100: the index is declining at the beginning of the month.  Fundamental analysis for 03.11.2016