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UK business confidence ‘at an 18 month high’

UK business confidence ‘at an 18 month high’

Business confidence is increasing and the bank lending drought is easing, according to a series of new surveys today that fuel hopes the economy could be slowly turning around. But City experts are still warning that a sharp rise in investment is needed to ensure a “sustained” recovery. And while the Bank of England is expected to stay its hand on further stimulus at its rate-setting meeting this week, economists expect it will have to pump more money into the economy later this year.  Business confidence is an 18 month high, suggesting that the economy will grow by 0.4 per cent in the first quarter, avoiding a triple dip recession.

Meanwhile, the Euro fell from its recent highs on Monday after a eurozone official warned the currency may be too strong, sparking concerns it could hamper the region’s economic recovery. The euro dipped against the dollar, the pound and the yen after Pierre Moscovici, France’s finance minister, said at the weekend the single currency was stable and strong. Concerns over political instability in Spain were also weighing on the single currency, as Spain’s borrowing costs rose following allegations of corruption in the current government.

On the FX Markets, just like the ECB, the MPC are also due to meet this week, however it will likely be the event prior to that that will garner more attention than the rate setting meeting itself. Mark Carney who is due to replace King later on this year is set to testify the very same day, which will be heavily scrutinised for hints with regards to potential changes to  the way the BoE conducts its monetary policy. In terms of technical levels, supports are seen at 1.5674, the 21DMA lower Bollinger level at 1.5652 and then at 1.5636. On the other hand, resistance levels are seen at the 200DMA line at 1.5894, the 21DMA line at 1.5936 and then at the psychologically important 1.6000 level.

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