Pound Weakness and Trade Optimism Lifts FTSE
Fiona Cincotta January 13, 2020 10:38 AM
FTSE amid growing optimism over the signing of the US -China phase one trade deal on and on the back of a weaker pound.
FTSE has kicked off trading on the front foot amid growing optimism over the signing of the US -China phase one trade deal on 15th January and on the back of a weaker pound, pushing below $1.30.
The pound was already softer heading into the new week. However, dismal GDP data has since fuelled the selloff in sterling. GDP printed at -0.3% in November, well below October's 0% and short of expectations, as manufacturing proved to be the biggest drag on the economy. Following Mark Carney’s dovish comments at the end of last week pound traders are upping bets of a rate cut from the central bank. With no further clarity on a Brexit due for many months, the outlook for 2020 looks weak at best and a recession in the UK shouldn't be ruled out.
This week’s signing of the US – China trade deal has boosted sentiment across the globe. Investors will pour over the 86-page document for more details on the deal. Traders will be keen to understand the next steps for phase two, although Trump has already said that this could be after the US elections.
Geopolitical risk between US and Iran has eased helping boost the mod towards riskier assets. After 6% losses across the previous week, crude oil is consolidating losses below $60 per barrel.
Levels to watch:
The FTSE is up 0.5% at 7630, approaching its 5-month high. Trading above its 50, 100 and 200 sma to chart is clearly bullish.
Resistance can be seen at 7676 (Dec 27th high), before opening the door to 7730 (July 30th high).
On the downside support stands at 7450 (Jan 8th low) prior to 7408 (50 sma).
StoneX Financial Ltd (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.