How could the FTSE open after the Brexit deal?

A Brexit deal has been reached. Covid gloom could muscle in on Brexit optimism. The FTSE futures are pointing to a buy the rumour sell the fact response.

Brexit 2

The deal
After 4.5 years of wrangling a Brexit trade deal has finally been reached. The agreement is not yet sealed, and it still needs to be formally ratified by both sides. However, a swift and efficient ratification is expected. So far there have been no major signs of discontent from the UK backbenchers.

The deal provides for zero tariffs and zero quotas and is expected to give a boost to the UK economy at a time when it is facing a double dip recession. However, this doesn’t include financial services and the service sector limiting its benefits.

GBP/USD tepid reaction
The market reaction has been tepid. GBP/USD rallied just shy of 1% in the previous session and is holding earlier gains of 0.3%. However, its reaction post deal announcement has been a whimper at best as the agreement was priced in. Let’s not forget that GBP/USD rallied over 3% in November & 1.7% in December in part thanks to Brexit deal optimism.

FTSE rises pre-announcement
The FTSE 250, which is more domestically focused rallied 1.2% hitting a 10 month high. The international FTSE 100  closed prior to the announcement but extended yesterday’s gains in early trade closing up 0.1%. Stocks linked to the economic health of the economy benefitted the most with banks and house builders dominating once again the FTSE leader board.

The FTSE cash market is now closed until Tuesday morning. Trading could well be choppy on the open, particularly given the illiquid conditions and that covid’s grim outlook could muscle in on Brexit optimism over the extended break.

Where next for the FTSE?
The cleaning up of the Brexit saga will bring some relief to investors. However, the immediate reaction in FTSE futures has been one of buy the rumour sell the fact. 

FTSE futures are -0.4%, although continue to trade within an ascending channel dating back to early November. The index is testing its 20 sma but trades above its 50 and 100 sma suggesting a medium term bullish bias. 

A break below the 20 sma at 6490 could see the FTSE decline towards the lower band of the ascending channel at 6435. A break down of this level could open the door to 6300 horizontal support which has offered support since early November and then 6245 December low and 50 sma.

Immediate resistance can be seen at 6536 today's high, prior to 6600 (high 18th Dec) before 6645 (December high) prior to 6850 (March high).

Learn more about trading indices.

More from FTSE 100


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.