UK Prime Minister Boris Johnson was allowed home over the weekend after spending a week in St Thomas’ Hospital in London after he was admitted to hospital on Sunday 4 April. The Prime Minister is convalescing at Chequers and delivered an inspiring speech to the nation that focussed on protecting the NHS and prevailing in the fight against the Covid-19 virus by following hygiene and social distancing procedures. The decision to extend the lockdown in the UK is expected to be announced on Thursday and people are expected to be asked to stay home until 5 May. Many other countries have extended their lockdowns, with France saying that they will continue to remain shut until 11 May. France has also outlined the plan for restarting the economy after that date which includes: some economy & border opening, but masks to be worn and social distancing is to remain in place, schools to reopen soon but not universities (distance learning only at tertiary level) and public events & restaurants are likely to remain closed until July. Austria and Denmark have decided to ease some restrictions. Denmark, one of the first countries to impose a strict lockdown, has decided to allow primary schools and crèches to open next week. Austria has decided to initially allow small stores to open, followed by parks and bigger stores in two weeks and some restrictions on bars, restaurants and hotels two weeks after that. However if there is an increase in cases, lockdown measures will be swiftly re-imposed. The slow return to normality has brought relief and anxiety in equal measure. Many parents in Denmark are very concerned that the youngest in society are being let out of lockdown first. Markets are reacting to the news by moving higher. The risk on mood of last week took a slight wobble as markets reopened following the long weekend, but the buyers emerged in Asia overnight and this pushed equity markets to new highs for the week. Oil is also a key area of focus for the market with OPEC+ agreeing to production cuts in the region of 9.7M bpd. This came after a break through with Russia and Saudi Arabia last week. The agreement has produced a move higher in oil prices and a consolidation below the $30 mark for US Crude. Gold has been used as a store of value and has rocketed above the 1700.00 level to currently trade around 1723.00 after hitting a high at 1738.80.
The economic calendar today is light on data releases but the focus for markets will be tracking comments from the G7 meetings. The G7 meetings will discuss the economic impact of the Covid-19 virus.
The GBPUSD pair is currently trading at the 1.2547 level after it found support at the 1.2164 level earlier this month. The pair had moved down from the 1.2485 level of resistance and broke back down to test towards the 1.2200 level rallying above the lower high. Resistance may now be used at 1.2580, followed by 1.2600. This is followed by the 1.2650 and 1.2700 levels, which must be overcome in order to set up a test to target the 1.2735/1.2740 area. A break higher may seek to use this area as support and may then seek to test the 1.2770 level, the 1.2800 level and the 1.2850 level.
Price action has taken the pair back down to the 1.2250 area with potential support at 1.2200 and resistance at 1.2580. The pair deeply testing this zone, for it was used as a consolidation area in September and October, and has now moved higher. The 1.2488 are may now be used as support in conjunction with 1.2500. Price may also use the 1.2400 area followed by 1.2316, with a loss of the current low at 1.2165 potentially opening the way to 1.2100, followed by 1.2050 and 1.2000. The 1.1970 area was also used as support and resistance previously and a breakout below this level may find support around 1.1750/1.1700.
UK 100 Index
Deep selling in the UK 100 Index has seen the market sell off with other global equities since late February. The Index sold off after it found resistance at 7481.00 but has located support in the 4800.00 area and come back higher to test 5900.00. The Index may look to test potential resistance at 6000.00, followed by former support at 6400.00. The 6450.00 area has provided support for the index in the past and may be resistive. A break above 6500.00 is required to retest 6620.00 and 6890.00/6900.00. The 7000.00 area has been used as resistance and support previously and is followed by 7136.00. The previous high at 7733.00 may also be a potential source of resistance to any advance. Beyond this level the 7800.00 area may become a target in the medium term.
Support at 4800.00 produced the bounce in the short term and with the move higher, the 5000.00 area may provide support. Price has managed to get back above this level, and is using this area as support on the chart, with the 5550.00 level and 5430.00 area. The 5700.00 are may be used to support the price in the short term. The index created a higher low at 5575.00 which may provide support. A breakdown of this level may open the possibility of a move down to 5350.00 followed by 5210.00 and the 5000.00 area. A loss of this support zone may open the way to the low around 4800.00. Price may selloff for a test on the zone between 4500.00 and 4250.00 and there may be a considerable reaction if this zone is broken, opening the way for a move towards 4000.00.