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UK economy wasn't hurt by Brexit, according to recent reports

Monday, Aug 29 2016

It’s early, but data so far suggest the British decision to leave the European Union could be another example of a recurring phenomenon: expert predictions of dire consequences to political decisions that end up proving overheated. In the days after the vote, global stock markets indeed fell sharply. Perhaps if it had been just a little bit worse, a broader panic would have sent things into a spiral. Instead, markets have rebounded. The FTSE 100 climbed to near-record levels by the middle of August. Nor has the wider economy shown many signs of a coming downturn.

Retailers initially saw their sales plunge but that sharply reversed in August, according to data from the Confederation of British Industry. The U.K.’s measure of jobless claims dropped in July, showing that in aggregate, employers didn’t slash jobs because of the vote.  To be sure, it is still early days, and the data could be slow to recognize a downward turn. Adam Posen, president of the Peterson Institute for International Economics and a former Bank of England policy maker, said he believes that even if the U.K. technically skirts recession, its economy will ultimately prove to be quite clearly damaged, which would vindicate many of the warnings.

 

Sterling is currently being traded below 1.31 handle. Pair is likely to find support around 1.3050 area and resistance above 1.3150 level.

 

Source: Marketwatch.com

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