Two trades to watch: GBP/USD, FTSE

GBP/USD trades around 2021 low, GDP misses. FTSE rises to fresh post pandemic high.

Brexit 1

GBP/USD trades around 2021 low, GDP misses

The Pound dropped over 1% in the previous session, below 1.34 to a yearly low after the surprise jump in US CPI to 6.2% and as Brexit concerns dragged on sterling.

The UK government appears to be preparing to trigger article 16 to end the Northern Ireland – EU post Brexit trade deal.

Today weak UK GDP data is unlikely to help the case for GBP/USD. UK GDP grew just 1.3% QoQ in Q3, from 5.5% in Q2 and short of 1.5% forecast. Supply chain disruptions, labour shortages and rising energy prices dragged on growth.

The BoE appears to be more focused on jobs than growth so a December rate hike is still on the cards. Growth momentum is likely to remain weak in Q4.

The UK economy is still 0.6% smaller than where it was in February 2020.

Learn more about the Pound

Where next for GBP/USD?

GBP/USD has been trending lower since early January. The pair tanked o fresh yearly lows in the previous session, below 1.34.

Whilst today, has seen a mild tick higher. However, the move lacks conviction and the RSI is in bearish territory indicating further losses could be on the cards.

Support can be seen at 1.3393 yesterday’s low ahead of 1.333 and 1.32 the high from January 2020.

Any meaningful recovery would need to retake 1.3510 November 5 high and 1.3680 the 50 & 100 sma. It would take a move above 1.3830 for a bullish bias.

GBPUSD Chart

FTSE rises to fresh post pandemic high

The FTSE is set to open the session higher along with the majority of its European peers is looking to start the session high.

The weaker Pound is helping the FTSE advance thanks to the favourable exchange rate for the multi-nationals.

House builders will be in focus after upbeat results from Taylor Wimpey.

A rebound in crude oil prices, after 3% losses in the previous session could underpin oil majors.

Learn more about the FTSE

Where next for the FTSE?

The FTSE is extending its rebound from 6825 hit on September 20. The price has retaken the 50 & 100 sma. It trades above its multi-month rising trendline.

The RSI is supportive of further gains with a move towards 7350 and 7490 the February 20.

It would take a move below 7250 to negate the near-term uptrend. Further support can be seen at 7200. A break below here exposes the 50 sma at 7145.

 

FTSE chart  

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
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.