After two consecutive days of gains, the FTSE price was slightly down on Friday morning as it starts digesting the latest economic data. It seems that the much-vaunted reopening of the UK economy has been a bit of a damp squib with not much going on to coax investors. Additionally, the high Covid cases and ‘pingdemic’ in jobs have had a corresponding drag on the index as a whole.
At present, the FTSE is at 7019 or down by around 0.4% from yesterday’s price point. It seems that the US GDP results which resulted in less growth than expected have had an effect on all indexes as a whole but the FTSE price was actually performing better lately.
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Short Term Forecast For FTSE price: Economic Re-opening Remains Tepid With Investors Uncertain
After some strong earnings over the week, the FTSE price retreated slightly on the back of continued uncertainty over the Covid pandemic. The future should see the FTSE trading between a tight range of 7000-7100 although there could be a breakout either way. There seems to be quite strong resistance at the 7100 level so any bullish sentiment could soon evaporate at this level.
Although the recent price action has confirmed a slight increase in sentiment to the upside, today’s retracement seems to contradict this. To continue the bullish momentum, the weekly close should be above the 7100 mark. If that does not hold, expect some more bearish momentum over the next week and a possible retest of the $7000 level.
One must also look at the current prevailing economic situation in the UK. The situation is dire in the hospitality industry with thousands of jobs left unfilled. The consistently high level of Covid cases has also had a detrimental effect on the economic reopening. This uncertainty is expected to have a negative effect on the FTSE, at least for the short term.
Long Term Forecast For UK100: Resolving Uncertainty Remains The Key
For the time being, the FTSE price is likely to continue trading between the 7000 and 7100 level. If a boost in investor confidence occurs and a weekly close above the 7100 is reached, then it is possible that a considerable breakout will occur. As always, other factors such as economic performance remain in play.
Long term, the FTSE is expected to continue rising and reach the 8000 mark by the end of the year. If tourism continues to increase and the jobs situation improves, investor confidence will go up accordingly. One can expect the FTSE to continue going up after it breaches the 7100 resistance target.
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Gerald Fenech
