The FTSE 100 index is gearing for a higher open as traders’ focus remains on Brexit, US stimulus, and the upcoming nonfarm payroll numbers. The index is also reacting to the overall strong British pound and the worsening relations between the United States and China.
Brexit will be the main catalyst to watch out for today. That’s because, according to Michel Barnier and other members of his team, we will know whether there will be a deal or not. According to Bloomberg, while the UK has already made concessions on fisheries, France has threatened to veto any deal that limits its access to UK waters.
The FTSE 100 index is also reacting to the divisions in the United States, where congress has failed to reach an agreement on the next stimulus deal. While there is a bipartisan agreement on a $908 billion deal, Senator Mitch McConnel has instead proposed an unpassable $300 billion package. US stimulus issues are important for the FTSE 100 because most constituent companies do a lot of business there.
UK stocks will also react to nonfarm payroll numbers from the United States that will come out at 13:30 GMT.
Retailers will be among the most-watched firms in the FTSE index as a fire sale of Arcadia’s business starts. According to the Telegraph, the value of the brands has halved to just £400 million. Among the retailers said to be interested are JD Sports, Asos, and Boohoo.
FTSE 100 technical outlook
A look at the daily chart shows that the FTSE 100 is about to break-out. The index is trading at £6,513, which is at the upper side of the bullish flag pattern that is shown in black. It is also still between the 50% and 61.8% Fibonacci retracement level.
Therefore, for today, there is a possibility that the index will break out as bulls aim for the next resistance at £6,550. However, in case of more Brexit friction, there is also a possibility that bears will attempt to retest the lower side of the flag at £6,400.
FTSE index technical chart