FTSE Under Pressure As Hard Brexit Fears Resurface

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. 

The market had just assumed that Boris Johnson would look to extend the tight deadline of the end of the next year, given that it will be a highly ambitious task to get a trade deal agreed. Boris Johnson had a big enough majority to push an extension through, which makes this move less comprehensible to the markets. Although, his resounding victory also gives him a stronger mandate to get Brexit done.

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: 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.

Open an Account