FTSE: Can Support at 7383 Hold Amid Pound Strength and Trade Tensions?

Fiona Cincotta
By :  ,  Market Analyst
The FTSE has kicked off trading on the back foot weighed down by the election boosted pound and trade concerns, which are overshadowing a jump in domestically focused stocks.

The pound surged following the release of the MRP election poll overnight which predicts a 68 seat Toy majority. This poll is considered to be more accurate than standard polls and it correctly predicted that Theresa May wold lose her majority in the 2017 election. In other words, traders are giving the poll their full attention. 

A strong Tory majority is being linked to Brexit being ratified by Parliament and the UK leaving the EU with a deal in place by 31st January. This would mean the UK avoids a damaging no deal Brexit, a major plus point for the pound.

The FTSE trades inversely to the pound owing to the large percentage of multinationals on the index. Should gains in the gains in the pound continue the FTSE is likely to remain under pressure.

Trump’s actions don’t go unnoticed
Trade headlines are driving risk off sentiment. President Trump quietly signing the Hong Kong bill into law isn’t going unnoticed and investors are waiting to see the extent of the impact that his actions have on the fragile US – China relationship. Whilst risk appetite has taken a hit, the timing has been crucial with US stock markets closed for Thanksgiving.

Levels to watch
FTSE is down 0.3% in early trade. The index remains above its 200, 100 and 50 ma. Support can be seen at 7384, the low from the previous session. A breakthrough here could see the FTSE drop towards 7338. On the upside, a move above 7447 could indicate a more bullish outlook for the index.


Related tags: Indices UK 100 Sterling

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