GBPUSD and UK100 Index

The recovery in US equity markets has been impressive and has shattered the bearish signals that had been flashing on indicators. The strong move higher to start the week in the US has been moderated by weakness in Europe. Whether European equities will follow the US higher remains to be seen, but Asian equities have moved higher overnight. With the general risk on mood that failed to confirm a bearish signal in US equities, the US 500 Index is closing in on the 4500.00 area with the all time high beyond at 4550.00. The main story in yesterday’s session was the rally in technology stocks with strong buying across the sector. The launch of new Apple products was a catalyst for this move in technology. The move decoupled from the economic data as US Industrial Production fell to -1.3% against 0.3% expected and 0.4% previously which was revised down to -0.1%. ECB Member Visco said yesterday that market expectations were not that consistent with ECB guidance. He added that the bottlenecks are transitory and will take time to resolve. He noted that price pressures may last for some months even into next year but they don’t see second round effects. He said that monetary policy will remain accommodative and the ECB will look through price pressures. The Japanese 225 closed up 0.65%. The Hang Seng is trading higher by 1.46% while the Shanghai Composite is up 0.70%. Gold is trading at 1779.00. USDJPY is trading at 114.020.

Today BOE Member Mann will speak in the late morning followed by BOE Governor Bailey.  US FOMC Members Daly, Bowman, Waller and Bostic are due to speak this afternoon and evening.

GBPUSD

The GBPUSD pair is currently trading at the 1.3775 level, after it’s retesting of the February top at the 1.4250 level in early June and selling off. The pair had been moving higher in an uptrend since it located support at the 1.2676 level in September 2020 but broke below the rising support trend line in late March which was used as resistance in May. The pair had been consolidating around 1.3800 with support around 1.3600. But this broke down last month and the former support was tested as resistance. The pair has rallied higher over the last five days and is closing back in on the 1.3800 area. The 1.3885 area may be resistive along with 1.3900/1.3915 zone. Resistance has been noted around 1.3940 and 1.3970. A push over 1.4000 may encounter resistance around 1.4085/1.4090 followed by the 1.4165 area. 

Support may be seen around the 1.3710/1.3700 area. A loss of this zone may see support come into play around 1.3670. The 1.3610/1.3580 area may also be used as support followed by the 1.3570 level. From there the 1.3540 and 1.3500 levels may be of interest while a loss of 1.3410 opens the way to 1.3400 followed by 1.3355. Below these levels the 1.3300 area comes into view. 

UK100 Index

The UK 100 Index is trading around the 7222.00 area at present after recovering from its break lower to test the former highs at 6800.00/6815.00 from March and converting the area to support. The index is continuing to consolidate and trade sideways between support and resistance. Near term resistance may show up in the 7235.00 area. The 7250.00 zone may also act as resistance as the current high from yesterday. Beyond this level the 7285.00 area may become a target in the medium term, followed by the 7300.00 zone and the 7325.00/7330.00 area.

The 7200.00 area may be supportive as the round number. Frome there the 7100.00 zone has been used as support and resistance in the past. The 7000.00/6990.00 zone will be a key area to hold ahead of the higher low at 6945.00. The 6900.00 area may be used as support followed by support at 6828.00. The 6815.00/6800.00 area and the 6760.00 area may also be used as potential supports. The 6700.00 area and the 6645.00 area is also acting as support followed by 6616.00 and the 6600.00 levels. 

Philip Konchar

Core Spreads

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