FTSE 100 Falls on Pound Strength, Johnson-Corbyn Debate Eyed
FTSE 100 is slightly higher in today’s trading. The UK’s blue-chip stock index is trading around 7,161.6 which is 17.2 points or 0.24% higher from its day open price. This follows after the stock index closed lower in yesterday’s trading from 7,199.4 to 7,144.9.
Rally in British Pound Hurting UK Stocks
In case you have missed it, the British pound is trading at its 8-month highs against the US dollar. GBPUSD is hovering around 1.3150 which is the highest we have seen the exchange rate since May 2019. The recent strength in the British pound has not been welcome news to some companies listed on the London Stock Exchange. Remember that when the pound exchange rate is high, it takes more of a foreigner’s currency to acquire a product or service that is priced in pounds.
Boris Johnson-Jeremy Corbyn Debate to Affect FTSE 100?
There are no high-impact economic reports scheduled for release from the UK today. However, we do have a debate between Conservatives leader and Prime Minister Boris Johnson and Labour party leader Jeremy Corbyn.
Scheduled on BBC later today, at 8:00 pm GMT, the two leading party leaders will go head-to-head on The Prime Ministerial Debate. This is the second one since November 29. If you remember, Boris Johnson was widely viewed as the winner of the debate with 51% of the audience voting in his favor. On the other hand, only 49% voted for Corbyn. The results had a slightly bearish effect on the FTSE 100 as it suggested that the lead between the two parties is narrowing.
Market participants are mainly concerned with the uncertainties brought about by Brexit. Therefore, polls showing that Boris Johnson and the Conservatives party could win the upcoming UK general elections on December 12 will help ease concerns. It will be much easier for Johnson to pass a Brexit deal in Parliament and will eliminate uncertainties brought about by the UK’s divorce from the European Union.
Connecting the higher lows and higher highs since August 2019, we can see that FTSE 100 has been trading in a rising channel. In fact, the stock index looks like it is now testing the bottom of the channel.
Positive poll results after the debate which show that Johnson is still in the lead could push FTSE 100 higher. A close above yesterday’s high at 7,199.2 could mean that the index is on its way to test resistance at the top of the channel around 7,463.1. On the other hand, a close below yesterday’s low at 7,123.3 could mean that FTSE 100 is on its way to support around October lows at 7,000.7.Download our latest quarterly market outlookfor our longer-term trade ideas.
Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.