United Kingdom Financial Stability Report

Info

History

Chart

Impact:

Medium

Source: Bank of England

Next Release:

Date:

Period:

What Does It Measure?

The Financial Stability Report (FSR) measures the resilience and overall stability of the UK's financial system, focusing on risks that could threaten economic growth and stability. It assesses key areas such as banking sector health, financial markets, leverage in the non-financial corporate sector, household indebtedness, and macroeconomic conditions.

Frequency

The Financial Stability Report is released biannually, typically in June and December, often as a final figure, providing a comprehensive overview of the financial system's stability and the risks involved.

Why Do Traders Care?

Traders pay close attention to the FSR as it provides critical insights into potential vulnerabilities in the financial system that could impact monetary policy decisions and market confidence. Positive assessments may lead to bullish sentiments in equities and the currency, while negative findings could instigate bearish reactions across various financial markets.

What Is It Derived From?

The FSR is derived from data collected by the Bank of England, utilizing methodologies that include stress testing of financial institutions, surveys of banks and other financial entities, and assessments of global economic conditions. Regulators analyze indicators such as capital ratios, non-performing loans, and overall macroeconomic performance to gauge stability.

Description

The Financial Stability Report highlights potential risks and vulnerabilities identified in the financial system, addressing topics like the housing market, credit conditions, and international influences on the UK economy. Preliminary reports are based on initial assessments, while final reports offer detailed analyses, leading to potential adjustments in market perceptions and actions.

Additional Notes

The FSR serves as a coincident economic measure, aligning its findings with ongoing economic trends and influences in the financial sector. Its findings are often compared to other indicators such as the Bank of England’s Inflation Report and the Monetary Policy Report, contributing to a comprehensive understanding of the UK’s financial landscape.

Bullish or Bearish for Currency and Stocks

Higher than expected: Bullish for GBP, Bullish for Stocks. Lower than expected: Bearish for GBP, Bearish for Stocks. A dovish tone signaling lower interest rates or economic support is usually good for the GBP but bad for Stocks due to increased liquidity leading to potential inflation concerns.

Legend

High Potential Impact
This event has a strong potential to move markets significantly. If the 'Actual' value differs enough from the forecast or if the 'Previous' value is significantly revised, it signals new information that markets may rapidly adjust to.

Medium Potential Impact
This event may cause moderate market movement, especially if the 'Actual' deviates from the forecast or there's a notable revision to the 'Previous' value.

Low Potential Impact
This event is unlikely to affect market pricing unless there's an unexpected surprise or a major revision to prior data.

Surprise - Currency May Strengthen
Actual deviated from Forecast on a medium or high impact event and historically could strengthen the currency.

Surprise - Currency May Weaken
Actual deviated from Forcast on a medium or high impact event and historically could weaken the currency.

Big Surprise - Currency More Likely To Strengthen
'Actual' deviated from 'Forecast' more than 75% of historical deviations on a medium or high impact event and may likely strengthen the currency.

Big Surprise - Currency More Likely To Weaken
'Actual' deviated from 'Forecast' more than 75% of historical deviations on a medium or high impact event and may likely weaken the currency

Green Number	Better than forecast for the currency (or previous revise better)
Red Number	Worse than forecast for the currency (or previous revise better)
Hawkish	Supports higher interest rates to fight inflation, strengthening the currency but weighing on stocks.
Dovish	Favors lower rates to boost growth, weakening the currency but lifting stocks.

Date	Time	Actual	Forecast	Previous	Surprise