How could the FTSE open after the Brexit deal?
Fiona Cincotta December 24, 2020 4:52 PM
A Brexit deal has been reached. Covid gloom could muscle in on Brexit optimism. The FTSE futures are pointing to a buy the rumour sell the fact response.
After 4.5 years of wrangling a Brexit trade deal has finally been reached. The agreement is not yet sealed, and it still needs to be formally ratified by both sides. However, a swift and efficient ratification is expected. So far there have been no major signs of discontent from the UK backbenchers.
FTSE rises pre-announcement
The FTSE 250, which is more domestically focused rallied 1.2% hitting a 10 month high. The international FTSE 100 closed prior to the announcement but extended yesterday’s gains in early trade closing up 0.1%. Stocks linked to the economic health of the economy benefitted the most with banks and house builders dominating once again the FTSE leader board.
Where next for the FTSE?
The cleaning up of the Brexit saga will bring some relief to investors. However, the immediate reaction in FTSE futures has been one of buy the rumour sell the fact.
FTSE futures are -0.4%, although continue to trade within an ascending channel dating back to early November. The index is testing its 20 sma but trades above its 50 and 100 sma suggesting a medium term bullish bias.
A break below the 20 sma at 6490 could see the FTSE decline towards the lower band of the ascending channel at 6435. A break down of this level could open the door to 6300 horizontal support which has offered support since early November and then 6245 December low and 50 sma.
Immediate resistance can be seen at 6536 today's high, prior to 6600 (high 18th Dec) before 6645 (December high) prior to 6850 (March high).
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.