Technically, a national economic recession is defined as two consecutive quarters of contraction, and yesterday's Office for National Statistics data confirmed that this has happened — UK GDP fell in the third and fourth quarters of 2023 by 0.1% and 0.3% respectively.

The Guardian writes that the recession may be deeper than it seems at first glance:
→ Increased government spending (including for the military) masks a deep and persistent decline in production.
→ The economy is shrinking despite population growth;
→ In the fourth quarter of 2023, the deficit widened to £26.3 billion, or 3.9% of GDP, up £5.9 billion from the third quarter.
→ The big problem is the decline in goods exports. Soaring prices for imported raw materials and energy have played a major role in increasing the cost of producing goods in the UK and making it difficult to sell them abroad.

However, the price of the UK-100 index (or FTSE-100) is near all-time highs. This is because the Bank of England may ease monetary policy to avoid worsening the recession. And this will be a positive factor for the development of the top 100 companies whose shares are included in the index — this expectation is included in the current quote.

The UK-100 Index chart shows that:

→ today the price of UK-100 is moving within an upward trend (shown by the blue channel);
→ demand forces are active at the lower border of the channel, quickly absorbing all declines (shown by arrows);
→ the bulls confirmed their dominance upon breaking through the 7,800 level, forming a strong cup-and-handle pattern;
→ the psychological level of 8,000 points prevents the bulls from maintaining the growth rate - when approaching it, the bullish candles become narrower. Buyer confidence is waning. This creates difficulties for the price to realize the prospect of reaching the upper boundary of the channel.

It is possible that the upward trend, rooted in the fall of 2023, will continue with the formation of a correction before attempts to overcome the resistance block of 8,000-8,050. In this scenario, support for the UK-100 price may come from:

→ Fibo level 50% rollback from growth impulse A→B;
→ local support formed by intraday price action around the level of 7.888;
→ median line and/or lower border of the blue channel.

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