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FTSE 100 Fall Ahead of The Bank of England Decision

FTSE 100 Chart

FTSE 100 fall in early trading on fresh coronavirus worries and ahead of the Bank of England policy decision later on the day. Investors expect that the central bank will keep interest rates unchanged at current low levels (0.1%) and will increase the bond-buying programme by at least 100 billion to a total of 745 billion. 

Some analysts believe that BOE will increase the QE up to 150 billion. While the bank has played down the negative rates scenario, Governor Bailey in a speech in May said that negative interest rates are under active review. 

Liquidity from central banks and relief packages from the government continues to support the UK equities.   

As reported yesterday, the UK inflation fall to 4-year lows in May as the coronavirus lockdown pressured demand and prices. Fall in prices in oil, fuel and sports and leisure activities weigh on inflation. Inflation in May was at 0.5% down from 0.8% in April and 1.5% in March. 

Tesco is 1.15% higher at 229.60 after it announced that sold the Polish business to Denmark’s retailer Salling Group for £181 million. BT Group is 0.89% lower at 117.17, Vodafone (VOD) is 0.71% lower at 128.23, Ocado is 0.05% higher at 2,000. Lloyds Banking Group (LLOY) is 0.60% lower at 32.37, Barclays (BARC) is 0.60% lower at 118.68, and RBS is 0.94% lower at 121.63.

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FTSE 100 Index Resistance and Support

FTSE 100 is 0.25% lower at 6,237 in a correction mode as the index met stiff resistance at the 100-day moving average. The technical picture remains positive for the short term as longs as it holds above the 50-day moving average, but the long term picture is still bearish below the 100-day moving average.  

On the downside, first support for the FTSE index will be met at 6,209 the daily low. Next support zone stands at 6,055 the low from June 16. If the sellers break that support, then the next target is at 5,982 the 50-day moving average. 

On the flip side, the FTSE 100 immediate resistance is at 6,253 the daily high. The next hurdle stands at 6,382 the high from June 10. Next level to watch is at 6,475 the high from June 9.

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