On Thursday, the FTSE 100 index in London is expected to open higher, recoup the losses it made on Wednesday. Previously, after US President Trump mentioned on social media that a “major” agreement was about to be reached, US media reported that Trump would announce a trade agreement with the UK on Thursday. The New York Times and Politico, citing multiple people familiar with the relevant plans, reported that Trump was about to reach an agreement with the UK. IG data shows that FTSE 100 index futures suggest it will open 72.0 points higher, or 0.8%, to 8,631.33. On Wednesday, the London market Index dropped 38.09 points, or 0.4%, to close at 8,559.33, ending a 16-day winning streak.
In the early trading on Thursday, the exchange rate of the pound against the US dollar dropped to 1.3314 US dollars from 1.3342 US dollars at the close of the London stock market on Wednesday. The exchange rate of the euro against the US dollar dropped from 1.1344 US dollars to 1.1308 US dollars. The exchange rate of the US dollar against the Japanese yen rose from 143.39 yen to 143.88 yen. Ipek Ozkardeskaya, an analyst at Julius Baer Bank in Switzerland, commented: “This week’s Federal Reserve meeting is proceeding as planned.” The stance of the meeting was rather hawkish, but it was basically in line with expectations. The Federal Reserve kept interest rates unchanged as widely expected and hinted that it would not rush to cut rates before collecting more data to assess the impact of tariff policies. The Federal Reserve believes that tariffs may lead to higher inflation and unemployment rates. Although the expected surge in inflation is temporary, it is still possible to persist. Federal Reserve Chair Jerome Powell said on Wednesday that the Fed can be patient with monetary policy while waiting for the full impact of U.S. trade policy on the economy to manifest. Powell said, “We think we can be patient and we will keep an eye on the data.” He pointed out that there is great uncertainty regarding the scale, scope and timing of tariffs. When speaking to reporters, Powell said that the Federal Reserve could act quickly at the “right time”, but if tariffs persist, it will not be able to make progress on the target this year. At the end of the two-day meeting, the Federal Open Market Committee unanimously voted to maintain the target range for the federal funds rate at 4.25% – 4.50%.
An economic think tank has warned that the British government may fail to meet key fiscal rules, increasing the possibility of tax increases later this year. According to the National Institute of Economic and Social Research in the UK, economic growth this year will also be weaker than previously expected. The latest forecast of this institution indicates that the slowdown in domestic demand and global economic uncertainties will affect the potential growth for the whole year. It predicts that the UK economy will grow by 1.2% in 2025, “amid low business confidence, high uncertainty and rising cost pressures”. In its previous forecast in February, the institute had expected a growth of 1.5% this year. The think tank pointed out that the slowdown in growth will lead to tax revenue being lower than previously predicted. Therefore, the government is expected to fail to meet its fiscal rules, which require a decrease in the proportion of UK national debt in the economy and the achievement of a budget surplus.
Corporate financial reports and commodity price dynamics
The local business schedule on Thursday includes the full-year performance report of Airtel Africa and the transaction statement of retailer Next. On Thursday morning, the price of Brent crude oil rose slightly to $61.51 per barrel from $61.45 on Wednesday night. The price of gold dropped from $3,386.18 per ounce to $3,375.81.
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