Will FTSE 100 futures sink below 6000 this week?
British blue-chips recovery is closely tied to the US economy with Brexit talks nearing a no-deal, with FTSE 100 futures pointing to further losses on Wednesday. But will the index slip below 6000 this week?
- FTSE 100 slides as stronger pound weighs on overseas earnings
- Could the FTSE 100 fall below psychological 6000 benchmark this week?
British blue-chips recovery is closely tied to the health of the US economy now that Brexit talks edge closer to a no-deal, with the FTSE 100 closing in the red and the futures market pointing to further losses on Wednesday.
The FTSE 100 closed 1% lower at 6037 points, with the futures market extending losses by a further 85 points at 6015 at the time of publication. But will the blue-chip index slip below 6000 this week?
FTSE 100 sees early gains eroded after pound surges
The FTSE 100 struggled to hold onto to Monday’s gains, with UK equities sliding after the pound climbed against the dollar, weighing on the value of blue-chips’ overseas earnings.
GBP/USD hit a high of 1.31714 on Tuesday, with it pulling back slightly later in the session but still up 0.45% to 1.31225 at the time of publication.
Rebounds for GBP/USD, which have been quite dramatic, have also been short lived, according to Chris Beauchamp, chief market analyst at IG.
Yesterday’s weak bounce could not hold $1.314 and the rally off the overnight lows has run its course at $1.311. Below $1.305 the price encounters the support zone at $1.3015, which has held back further downside so far this month.
FTSE 100: technical analysis
The FTSE 100 is continuing its recent rise, with the index having turned upwards after a decline into the 76.4% Fibonacci retracement level, according to Josh Mahony, senior market analyst at IG.
‘With price having subsequently broken through 6116 and (provisionally) 6164, it looks like the recent period of downside is likely to be over,’ he said. ‘This could mark the beginning of another rise towards the 6324 resistance level, thus signalling further upside over the short-term.’
That bullish outlook holds unless we break through the 6080 lows seen yesterday afternoon,’ Mahony added.
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