The FTSE traded 0.32% higher on Monday as a lack of negative trade developments made room for recovery. However gains were capped by the UK’s manufacturing PMI figure which missed expectations and fell to contraction territory. Moreover, trade concerns maintain risk averse flows as cautious sentiment dominates global markets awaiting to see whether there is a possibility of resolution on the US’s trade war with China and Mexico. Today, the UK publishes construction PMI figure for May which should further reflect the British economy’s performance amidst Brexit uncertainty. Meanwhile the Footsie may take directional cues from Wall Street as the US publishes factory orders report and Fed Chairman Powell is scheduled to speak on monetary policy later in the day.
The FTSE traded off its intraday low at 7080 to end higher at 7194 on Monday. The index may be set for a reversal today as it trades below the 7150 level to indicate selling pressure and raise the chances of re-testing the support at 7080 after which further declines would target the 7040 level. On the other hand, should the FTSE trade and hold above the 7150 level, look for price to target the 20-period MA at 7200 acting as dynamic resistance on the downtrend.
Support: 7080/ 7040
Resistance: 7180/ 7200