Pound Gains Hit FTSE In Risk On Trading

The FTSE was in line to rise for the 11th straight session on Friday however the soaring pound rained on the FTSE’s parade.

The FTSE was in line to rise for the 11th straight session on Friday however the soaring pound rained on the FTSE’s parade. The UK index pared gains and is heading towards the close on Friday on the flat line, even as the Santa rally showed no signs of slowing elsewhere. US stocks reached for fresh all-time highs on the open.

The FTSE has seen its best run in 3 years as risks which have weighed on the index across 2019 are dissipating, boosting risk appetite. Trade sensitive stocks have rallied amid further positive signals surrounding the US – China trade deal. Heavyweight miners such as Glencore and BHP Billiton provided the biggest boost to the FTSE in early trade, gaining 2% each, buoyed by the improved outlook for China’s economy, the world’s largest consumer of metals.

Domestic stocks on the FTSE were also on the rise, with Next, British Land and TUI Travel leading the charge advancing over 1%. Not only are risks on the global scene easing, but Brexit fears have also recently receded boosting demand for domestically focused stocks. 

Pound surges
However, gains on the FTSE pared as the pound surged through $1.31 handle, thanks to a weaker dollar as risk sentiment leads the way. Fears over no deal Brexit are likely to cap the rally but given the thin trading the moves we are seeing are more exaggerated than in a standard session. 

Looking ahead investors will be keen for a date to be confirmed for the signing of the US – China phase one trade deal. Developments surrounding further stages to the trade deal will also drive risk sentiment in the coming year, as will the UK’s negotiations with the EU over a free trade deal.

Levels to watch:
The FTSE has been in a strong up trend since the beginning of December. It trades firmly above its 50, 100 and 200 sma. However, the index is overbought according to RSI, so could lead to a downward move.

A breakthrough resistance at 7727 (YTD high) could open the door to 7790 (Aug’18 high). On the downside, support can be seen at 7446 (Nov resistance turned support) prior to 7130 (Dec low).


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 cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.