FTSE 100 started sharply higher the session mirroring positive Asian and Wall Street trading sessions. The index is getting a boost from GBP weakness as the GBPUSD hits fresh yearly lows. China stocks rebounded as the panic selling calmed down after the PBOC intervention. The coronavirus outbreak remains the key point of uncertainty. A positive development for the markets would be if the virus can be contained or if a medical cure can soon be introduced.
On the Brexit front yesterday, the European Commission presented earlier the draft mandate for the negotiations with the UK. Meanwhile in a speech by PM Boris Johnson about the future trade relationship with the EU, Johnson said that the UK wants a comprehensive free trade agreement like Canada’s. He also said that the UK wants a thriving trade and economic partnership with the EU. On the economic data, the UK Manufacturing PMI came in at 50, beating the expectations of 49.8 in January.
FTSE 100 is 1.53% higher at 7438. The index breaks convincingly above the 200 and 100-day moving average. The visit below the 100-day moving average was short-lived as the index spend just two trading sessions below the critical support. If FTSE 100 settles today above the two main moving averages in the daily chart the bulls will retake control.
On the upside, initial resistance for the FTSE stands at 7,440 the daily high. The next critical resistance on the upside is the 50-day moving average at 7468. More offers would emerge at 7517 the high from January 29th.
On the flip side, the first support for the FTSE index stands 7376 the 100-day moving average, and then at 7,326 the daily low. Next support for the FTSE 100 is the daily low at 7286 the low from yesterdays trading session.