Two trades to watch: FTSE, GBP/USD
Fiona Cincotta June 11, 2021 2:45 AM
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.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.