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FTSE 100 Reaches 4-Month Highs on GBP Weakness

ftse 100
ftse 100

The FTSE 100 continued to trade higher yesterday. The UK blue-chip stock index opened at 7,565.7 and closed at 7,585.7. As of this writing, it is trading around its open price at 7,581.0.

Gainers and Losers

Gains were led by Glencore at 2.33%, followed by Kingfisher with a 2.09% uptick. In third was AstraZeneca which was up by 2.06%. Meanwhile, Flutter Entertainment and Scottish Mortgage rounded up the top 5 stocks with 2.04% and 1.92%, respectively.

On the other hand, losses were led by Nmc Healthcare LLC which was down 11.13%. It was followed by Pearson with a 6.11% loss. The third biggest loser was Hargreaves Lansdown PLC, being 3.19% in the red.

FTSE Benefits from Pound Weakness

It would seem that the FTSE 100 is benefitting from the pound’s weakness. Remember that a weaker currency is beneficial for British companies who sell their products or services outside of the UK. This is because their customers are able to buy more just because the pound exchange rate is cheaper.

The weakness in the currency has been largely due to concerns that the UK would end up with a no-deal Brexit. Remember that earlier this week, Prime Minister Boris Johnson passed a bill to keep Parliament from voting for an extension to the current deadline set on December 2020. Market participants feel that this may not be enough time for the UK and EU to iron out extensive trade negotiations.

Read our Best Trading Ideas for 2020.

FTSE 100 Outlook

On the 1-hour time frame of FTSE 100 CFDs, we can see that the stock index is testing support at the rising trend line (from connecting the higher lows of December 18 and 19). It would also look like the current level where the stock index is trading coincides with the 38.2% Fib level when you draw the Fibonacci retracement tool from yesterday’s low to yesterday’s high. Reversal candles 7,560.0 may suggest that the FTSE 100 could rally up to yesterday’s highs around 7,583.9. On the other hand, a strong close below the trend line may hint that the stock index could fall to yesterday’s low at 7,526.7 which also coincides with the 100 SMA.