FTSE 100 index started the day muted after substantial gains yesterday as traders await the UK construction data. FTSE pricing in the prospect that the economy can improve in the short term after the sharp drop in the last two months. The strong recovery in oil prices also helped the FTSE index to rebound the previous week. The recent dismal economic data shows the magnitude of the coronavirus crisis damage but still is too early to have a clear view of how fast the global economy will return to the pre-crisis level.
Investors Focus on Bank of England
The Bank of England will announce it’s policy decision tomorrow with expectations pointing to keep the interest rates unchanged. Some analysts expect that the BOE might increase the QE up to 200 billion or give a tip for an increase in the June policy meeting. Bank of England announced £200bn of bond purchases March, in an attempt to calm the markets and ensure that the UK government can fund its relief package.
FTSE 100 is 0.36% higher at 5,870 as the index attempts to break convincingly above the 50-day moving average. The index has reached a make or breakpoint at the 50-day moving average where it failed last week.
On the downside, minor support for the FTSE stands at 5,739 the daily low. If the index breaks lower, the next support area is at 5,746 the low from yesterday’s trading session. More support for the FTSE 100 index would be met at 5,634 the low from April 22.
On the contrary, first resistance for the FTSE 100 index stands at 5,876 the daily high. The next critical resistance for the FTSE is at 6,154 the high from April 30. If the index breaks above 6,154 the next supply zone will be met at 6,670 the 100-day moving average.