Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

European indices: ECB, BoE rate decisions fuel optimism in Europe and UK amid geopolitical risks

Despite looming geopolitical risks, Europe and the UK exhibit promising financial stability, buoyed by ECB and BoE decisions and a stabilising Chinese economy.

Source: Bloomberg

Geopolitical tensions and economic prospects

It's hard to pen an article at this point without first acknowledging the risks coming from geopolitical tensions in the Middle East. However, if we could look past geopolitics for the moment, there are some encouraging signs emerging in Europe.

ECB's monetary policy and its impact

Following the ECB's divided decision to remain on hold in September, even some of the more hawkish ECB members have signalled greater comfort with the inflation outlook. Additionally, there are indicators that the Chinese economy, to which Europe has significant exposure, has stabilised. This is further supported by discussions of additional stimulus measures set to be unveiled by Chinese authorities in the coming weeks.

Optimism in the UK's economic landscape

In the UK, optimism has surfaced after the BoE decided to keep rates on hold in September. Pressure seems to be easing in the labour market, and inflation is cooling, following the Bank of England's unprecedented monetary tightening.

Further confirmation is expected in UK data to be released this week, including:

  • UK labour market data set for release tonight should indicate that headline Average Weekly Earnings have eased to 8.3% 3M YoY in August, down from 8.5% previously. Average Weekly Earnings Ex-Bonus are projected to remain steady at 7.8% 3M YoY.
  • UK inflation data scheduled for Thursday night is expected to show a decline in headline inflation to 6.6% YoY in September, compared to 6.7% in the preceding period. Core inflation is anticipated to soften to 6% YoY in September, down from 6.2% YoY in August.

DAX technical analysis

In September, we projected that the DAX would continue its downward trajectory, targeting the 15,000 support level in its third and final wave (Wave C of an ABC correction) to conclude a correction from its late August high of 16,615.

Signs of basing that emerged in early October suggest the correction is nearing completion. To confirm this, a sustained close above the 200-day moving average, set at 15,725, is required. Achieving this would establish a test and potential breach of the July high of 16,615 by year's end.

Be aware that if the DAX were to experience a sustained break below the 15,000 support level, this would signal a deeper pullback is likely, targeting 14,650.

DAX daily chart

Source: TradingView

FTSE technical analysis

The FTSE continues to trade sideways maintaining horizontal support at 7200 and facing downtrend resistance at 7720/7750, which originates from the February high of 8047.

Should the FTSE achieve a sustained break above resistance at 7720/7750, it could trigger a year-end rally towards 8000/8050. Be aware that until this occurs, further range trading is likely, including a possible retest of the range lows at 7200.

FTSE daily chart

Source: TradingView

  • TradingView: the figures stated are as of October 17, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.