Two trades to watch: FTSE, EUR/GBP

FTSE rises post Fed & ahead of BoE. EUR/GBP rises with eyes on the UK central bank and PMIs.

Brexit 1

FTSE rises post Fed & ahead of BoE 

The FTSE, along with its European peers is heading higher, upbeat after a strong close on Wall Street.  Investors reacted well to the Federal Reserve pushing back tapering bond purchases until later in the year. 

Concerns over the indebted Chinese Evergrande also eased boosting sentiment. 

All eyes are now on the BoE which is due to give its monetary policy announcement later today. The bank is not expected to move on policy. All eyes will be on whether any other policy makers join Michael Saunders in voting to reduce QE early. 

What to expect from the BoE 

Where next for the FTSE? 

The FTSE rebounded from 6825 pushing back above the 200 sma. Its extension above the 50 sma and horizontal support at 7095 in addition to what appears to be a bullish crossover on the MACD are keeping the bulls optimistic of further gains. 

Buyers will be looking towards 7155 the falling trendline resistance ahead of 7195 the September high in order to bring 7235 back into play. 

 

EUR/GBP rises with BoE & PMIs in focus 

Inflation is expected to jump to a record high in September. However, the BoE is not expected to move on rates. Should more BoE policy makers vote in favour of winding down the QE programme early, the Pound could get a boost. The UK central bank is not expected to hike interest rates until mid next year. 

In addition to the BoE PMI data from the Eurozone and the UK will be in focus. Eurozone manufacturing and service sector PMIs are expected to rise in September after the spread of Delta covid was brought under control. 

Learn more about the BoE 

Where next for EUR/GBP? 

EUR/GBP pushed higher at the start of the week extending gains to a weekly high of 0.8613 yesterday. The shooting start candle at yesterday’s high hints towards a bearish reversal and a pullback for the pair.  

However, the bullish MACD and the hold above the 100 sma on the daily chart are keeping buyers hopeful.  

Resistance can be seen at 0.8613. A break above this level could bring 0.8675 the July high back into focus. 

On the flip side, should the 100 sma at 0.8573 fail to hold, support can be seen at 0.8545 the 50 sma. A break below here could bring 0.8512 into focus 

 

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