FTSE had a volatile trading day on Friday. UK’s stock index initially rallied to an intraday high of 7,406.1 only to drop like a rock to 7,195.4. Then, just before the week’s trading came to an end, FTSE bounced back up to close the day 37 points higher at 7,337.8.
The biggest gainers were Centrica which posted a 2.88% gain and mining company Glencore with a 2.84% uptick.
The UK’s blue-chip stock index may have benefitted from the pound’s weakness brought about by disappointing forex news. On Friday, the UK services PMI report printed at 48.6 versus 50.1 while the manufacturing PMI report came in at 48.3 versus the 48.8 forecast. Readings below 50.0 indicate worsening economic conditions. Therefore, the reports on Friday fueled speculations that the Bank of England (BOE) may soon ease policy further to support the economy amid Brexit uncertainties.
The weaker currency benefitted the FTSE because products sold by UK companies become relatively cheaper as the pound exchange rate goes lower.
It also helped that optimism on a trade deal happening between the US and China by this year been renewed.
With optimism slowly spilling over from Asian equities markets, FTSE looks poised to test resistance at 7,406.1 where it hit highs on November 19. If there are enough buyers to push the index past this level, the next resistance could be around 7,517.3 where the index hit highs on April 23. On the other hand, if sellers dominate today’s trading, the near-term support level is at 7,254.1 where FTSE made lows on October 31, November 11, and November 15.Download our latest quarterly market outlook for our longer-term trade ideas.