FTSE Under Pressure As Hard Brexit Fears Resurface
Fiona Cincotta December 17, 2019 11:01 AM
FTSE slips as Boris honeymoon period is over
The FTSE has come under pressure in early trade, despite the slumping pound, as fears of a hard Brexit return to haunt traders. The UK index is down 0.1% at the time of writing.
Newly elected Prime Minister Boris Johnson has said that there will be no extension to the transition period, fuelling fears that the UK could still crash out of the EU without a trade deal in place.
Blink and you missed it - with the Boris Johnson honeymoon period over those domestic focused stocks that rallied following a resounding win from the Conservatives and Brexit clarity are once again on the back foot amid the growing threat of no (trade) deal Brexit. Lloyds, RBS and home builders are dominating the lower reaches of the index.
Pound dives 1%
The pound has slipped in early trade, down over 1% versus the dollar on no deal Brexit fears. A greater than expected fall in UK average weekly wages is also dragging on demand for sterling. Weekly wages increased 3.2% year on year in the three months to October, down from 3.6% in September and below expectations of 3.4%. On a positive note unemployment remained at 3.8%. The weaker pound supports the multinationals on the FTSE which benefit from the preferential exchange rate. However, risk off sentiment is dominating causing traders to sell out of riskier assets such as stocks.
FTSE levels to watch:
Despite this mornings pullback the FTSE continues to trade above its 50,100 and 200 sma. We would be looking for a breakthrough support at 7446 (high 27 Nov) to negate the current bullish bias. On the upside a break above yesterday’s high of 7554 wold indicate further upside to come.
Disclaimer: GAIN Capital UK Limited (trading as "Forex.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, Forex.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by Forex.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although Forex.com is not specifically prevented from dealing before providing this material, Forex.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
For further details see our full non-independent research disclaimer and quarterly summary.