Two trades to watch: FTSE, GBP/USD

UK economy gathered momentum but missed forecasts in April. MoM GDP +2.3%, up from 2.1% but missing forecasts of 2.4%. Can FTSE retake 7100? GBP/USD trades at the upper end of its range.

Brexit 1

Can FTSE retake 7100?

The FTSE along with its European peers are pointing to a mildly stronger start, after an upbeat close on Wall Street. 

US indices finished higher despite US CPI inflation hitting 5%. There were enough one off factors in the data for investors to believe the Fed’s position that the spike in inflation will be transitory. 

UK GDP data revealed that the UK economy grew 2.2% in the three months to April as expected. GDP in April MoM rose 2.3% up from 2.1% in March but slightly below 2.4% forecast. 

Where next for the FTSE? 

After finding support around 7050, the 100 sma of the 4 hour chart earlier in the week,  FTSE rebounded making a fresh attempt on 7120 in the previous session before easing back to trendline support.

The FTSE trades above its ascending trendline dating back to mid May, and above the upward sloping 50 & 100 sma in a bullish trend.  

Buyers will be looking for a move beyond resistance at 7100 round number and 7122 the June high to target 7170 the May high. 

A break below the trendline support could point to further weakness. It would take a move below 7050, the weekly low and the 100 sma for the bears to gain traction.  

A guide to the FTSE

 

GBP/USD trades at upper end of range

The UK economy gathered momentum in April as lockdown restrictions eased and shops, hairdressers and outdoor hospitality reopened. 

GDP Mom rose 2.3% despite unexpected declines in manufacturing and construction. Output is now just 3.7% lower than where it was pre-pandemic.  

These figures could prompt speculation about when the BoE could start to tighten monetary policy. 

Sentiment remains cautious ahead of the G7 meeting in Cornwall and chatter over delaying the UK reopening could keep gains in the Pound capped.  

US consumer sentiment data is due later today and is expected to tick higher to 84 in June, up from 82.9 

Where next for GBP/USD? 

GBP/USD has been trading rangebound across June. The pair is trading at the top end of the range after rebounding off the lower band in the previous session.  

The 50 & 100 sma on the 4 hour chart are flat showing a neutral bias. 

Buyers will be looking for a move above 1.4180 in order to push through 1.42. Beyond here a more bullish outlook prevails.  

It would take a move below 1.41 for the sellers to gain traction and a more bearish picture to emerge. 

Learn more about Sterling

How to trade with City Index

Follow these easy steps to start trading with City Index today:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels.
  4. Place the trade.


Build your confidence risk free

More from Trade Ideas

Join our live webinars for the latest analysis and trading ideas. Register now

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.

For further details see our full non-independent research disclaimer and quarterly summary.