TCA Financial: The Bank of England may be set to cut interest rates within days after its Governor said that downside risks to the world’s 5th largest economy bad begun to “crystallize” UK rates are already at an all-time low of 0.5% but headwinds and uncertainty arising from the country’s decision to leave the European Union have threatened to adversely affect its economy.
Recent economic data suggests that the UK economic growth hit a brick wall at the end of the 2nd quarter, several weeks before the country’s 23 June vote to leave the European Union. The latest read on the British economy from financial services information company, Markit said that it expanded by just 0.2% from April to June.
BoE governor Mark Carney and the UK’s Chancellor of the Exchequer, George Osborne have hinted that fresh stimulus – both monetary and fiscal - could be needed if the country is to avoid a recession.
Colin Phipps, chief economist at TCA Financial said, “The likelihood of a recession has increased markedly since the Brexit vote but, if we’re being honest, it was probably headed in that direction anyway if the Markit data is anything to go by.”
The pound sterling plunged to new 31-year lows against the US dollar after Mr. Carney said that the UK was “entering a period of uncertainty”. Trading at below $1.28, the currency showed no signs of mounting a meaningful rally as hand-wringing over the future leadership of Britain’s Conservative Party and tension over the form Brexit will take weighed on investors. TCA Financial says it has advised clients to hold UK stocks in companies which earn large parts of their income overseas.

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TCA Financial is resolutely committed to helping our clients accumulate and preserve wealth by actively managing the deployment of their investment capital within the global financial markets. We have a proven, checkable track record of being able to accomplish this regardless of the prevailing macro-economic conditions because of our expertise and professionalism and because we know that markets, just like people, are all connected to varying degrees at varying times.