FTSE aims for gains despite sterling strength
The general rise in global equity markets continues, and the FTSE 100 has not been left out, despite a stronger pound that may continue to provide some headwinds.
Equities continue to benefit from revived risk appetite and inflows, after a tough four months that saw buyers dry up and investors cut back on exposure.
London’s headline index has climbed around 6% from its lows just after Christmas, and even succeeded in touching 7000, though its hold on this area was brief. One problem for the index has been the pound, which has exercised its usual restraining influence; sterling’s recovery has been due to a reduction in fears that the UK is headed towards a ‘no deal’ scenario in relation to its exit from the EU. While it is unclear what kind of relationship will now emerge, or even whether an exit will take place at all, the support for ‘no deal’ in Parliament is small.
Rising channel keeps FTSE on upward path
Since the end of December a trend channel has emerged, with the latest touch of the lower end of the channel around 6850 resulting in a small bounce that may see it push on towards 7000. The rising 200-hour MA (6871) could also provide some support:
Breadth allows for further upside
In terms of breadth, this rally may not be over. Medium-term breadth, as measured by the percentage of stocks above their 50-day MA, is only at 58%, above the mean but still off the highs of early 2018. While the ‘easy’ part of the bounce may be done, so long as breadth continues to hold up there is the potential for further upside.
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