Two trades to watch: FTSE,EUR/GBP

FTSE lags behind its peers after COVID alert level rises. EUR/GBP inches lower despite Boris Johnson’s warning

Charts (5)

FTSE lags behind its peers after COVID alert level rises

The FTSE is lagging behind its European peers investors weigh up the latest Omicron developments.

British Prime Minister Boris Johnson warned over the weekend of a “tidal wave” of Omicron to hit the UK.

Looking ahead the economic calendar is relatively quiet. Investors will be looking to the release of the BoE’s financial stability report.

This examines the health of the UK financial system and what the BoE is doing to improve it. The report in July highlighted that banks were strong enough to support the recovery but that COVID risks remain. With Omicron spreading quickly investors will be keen to see whether the recovery in the banks could continue.

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Where next for the FTSE?

After rising from its 7 week low in late November, the FTSE ran into resistance around 7380. The index has since traded relatively range bound, capped on the upside by 7380 and on the lower side by 7280. The RSI is also relatively neutral at 52, as the index waits for a fresh catalyst.

Buyers could look for s move over 7380 to target 7400 and fresh post pandemic highs.

Sellers could look for sa move below 7280 and the 200 sma at 7288 to target 7200 swing high 3rd December.

FTSE chart

EUR/GBP inches lower despite Boris Johnson’s warning

Boris Johnson’s Omicron warning initially sent the Pound lower before it started paring losses versus the Euro. The UK COVID alert level has been raised to level 4, the second highest level.

The economic calendar is quiet. German wholesale inflation rose to 16.6% YoY in November, up from 15.2%. On a monthly basis, inflation slowed to 1.3% MoM.

The BoE’s financial stability report will be the focus for Pound traders.

USD strength and the ECB’s more dovish tone ahead of the central bank meetings this week is keeping the pressure on EUR/GBP.

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Where next for EUR/GBP?

After rising from 0.8385 the late November low, the price ran into resistance at 0.86. The price has been extending declines from 0.86m, falling through a key support at 0.8535 the mid-November high, the 20 sma on the 4 hour chart and the rising trendline from late November. The MACD supports further downside.

A move below current levels of 0.8325 could open the door to the 200 sma at 0.8488 and the late November low of 0.8450.

Meanwhile resistance can be seen at 0.8550 last week’s high ahead 0.8575 high November 11 ahead of 0.86.


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