The FTSE traded 0.66% higher on Wednesday supported by the prospects of looser monetary policy from global central banks and a weaker pound. The UK services PMI figure slipped to 50.2 to sit slightly above contraction territory and adds to this week’s disappointing data on the UK’s manufacturing and construction sector thereby weighing on the pound and in turn buoying the FTSE’s gains. The UK’s deteriorating economic outlook has yet to see whether BOE would follow the ECB and Fed’s dovish stances which has supported global equities. Today, persisting weakness in the sterling should keep the FTSE afloat while markets monitor trade developments and US-Iran relations to dictate sentiment.
The FTSE gained 50 points and overcame the key resistance at 7560 to end at 7609 on Wednesday. The price is seen hugging the upper band validating the strength of the trend while the daily and 4H RSI reading remain in overbought territory suggesting that the FTSE may exhibit an eventual pullback. Look for the RSI reading to exit the overbought territory with a decline below the support zone of 12580/12560 to indicate short-term weakness and drive the FTSE to meet support at 7525. Alternately, if there is enough upside momentum, we should see price trade above 7620 to meet resistance at 7645 followed by 7685.