By contrast with the record rise in the American indices, European stock indices in November did not demonstrate rapid rise. Victory of Donald Trump in the elections has caused significant rise in the U.S. stock market, the bonds and the USD, due to expectations of significant changes to the fiscal, trade and regulatory policies.
Increasing investors’ risk appetite and withdrawal of funds from the safe-haven assets has led to the rapid rise in the USD and the US indices. The most significant rise was demonstrated in the shares of the US financial companies.
The index FTSE100 of the London stock exchange, which had steadily grown after Brexit referendum held late June, started to decline this month and may close this month "in the red".
According to the preliminary data released late October, British GDP in Q3 is at the level of 0.5% against the forecast of +0.3%.On the annual basis terms GDP in Q3 is at the level of 2.3% against the forecast of 2.1%. It means that the British economy continues positive trend and economic indicators in Q3 are consistent with the average rate in the previous four quarters. Country's GDP is by 8.2% higher than highest growth level recorded before the global financial crisis.
The British economy has successfully ridden out of storms after Brexit; however, it is still likely that economic growth in the UK will slow down compared to the first 6 months of this year.
At 12:30 (GMT+3) today traders ' attention will be drawn to the British GDP in Q3 (second estimate). The UK has the highest GDP growth among the countries with the developed economies. It is expected that the data on GDP will coincide with the preliminary GDP.
One of the main components of the UK economy is the financial sector, which was under significant pressure amid the upcoming move of the European financial companies from London and the reduction of financial transactions.
According to the Bank of England, GDP growth and labour market results are insufficient, which forces the Bank of England to consider possibility of interest rates decrease, which will put significant pressure on the pound, but boots the rise in the index FTSE100.
Therefore, macro-economic statistics and the data on GDP will have significant influence on the further movement in the British pound and the stock market.
Recent macro-economic British statistics are positive, which increases expectations of the positive data on GDP in Q3. It became known last week, that retail sales in the UK have grown by 1.9% in October against the forecast of +0.4%and by 7.4% against the forecast of +5.3% on the annual basis. The pair GBP/USD went up above 1.2500 on this news. The index FTSE100 is currently near the level of 6840.0.
Despite the decline in November, positive momentum in the index FTSE100 continues and the rise may resume. A lot will depend on the British macro-economic data and decisions of the Bank of England.