Two trades to watch: FTSE, GBP/USD
Fiona Cincotta June 11, 2021 2:45 PM
UK economy gathered momentum but missed forecasts in April. MoM GDP +2.3%, up from 2.1% but missing forecasts of 2.4%. Can FTSE retake 7100? GBP/USD trades at the upper end of its range.
Can FTSE retake 7100?
The FTSE along with its European peers are pointing to a mildly stronger start, after an upbeat close on Wall Street.
US indices finished higher despite US CPI inflation hitting 5%. There were enough one off factors in the data for investors to believe the Fed’s position that the spike in inflation will be transitory.
UK GDP data revealed that the UK economy grew 2.2% in the three months to April as expected. GDP in April MoM rose 2.3% up from 2.1% in March but slightly below 2.4% forecast.
Where next for the FTSE?
After finding support around 7050, the 100 sma of the 4 hour chart earlier in the week, FTSE rebounded making a fresh attempt on 7120 in the previous session before easing back to trendline support.
The FTSE trades above its ascending trendline dating back to mid May, and above the upward sloping 50 & 100 sma in a bullish trend.
Buyers will be looking for a move beyond resistance at 7100 round number and 7122 the June high to target 7170 the May high.
A break below the trendline support could point to further weakness. It would take a move below 7050, the weekly low and the 100 sma for the bears to gain traction.
GBP/USD trades at upper end of range
The UK economy gathered momentum in April as lockdown restrictions eased and shops, hairdressers and outdoor hospitality reopened.
GDP Mom rose 2.3% despite unexpected declines in manufacturing and construction. Output is now just 3.7% lower than where it was pre-pandemic.
These figures could prompt speculation about when the BoE could start to tighten monetary policy.
Sentiment remains cautious ahead of the G7 meeting in Cornwall and chatter over delaying the UK reopening could keep gains in the Pound capped.
US consumer sentiment data is due later today and is expected to tick higher to 84 in June, up from 82.9
Where next for GBP/USD?
GBP/USD has been trading rangebound across June. The pair is trading at the top end of the range after rebounding off the lower band in the previous session.
The 50 & 100 sma on the 4 hour chart are flat showing a neutral bias.
Buyers will be looking for a move above 1.4180 in order to push through 1.42. Beyond here a more bullish outlook prevails.
It would take a move below 1.41 for the sellers to gain traction and a more bearish picture to emerge.
How to trade with City Index
Follow these easy steps to start trading with City Index today:
- Open a City Index account, or log-in if you’re already a customer.
- Search for the market you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
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.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX 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), StoneX Financial 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 StoneX Financial 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 StoneX Financial 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.
StoneX Financial 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.