FTSE 100 futures edge higher as UK looks to ease lockdown measures
FTSE 100 futures edge higher once again this week, with investor sentiment improving as the UK government looks to ease lockdown restrictions.
FTSE 100 futures are up 1.6%, suggesting the May bank holiday weekend market will open higher, with investors welcoming the UK government’s plan to ease lockdown restrictions next week.
By law, the UK government must review its lockdown restrictions every three weeks, with British Prime Minister Boris Johnson unveiling his revised plans at 19:00 (BST) on Sunday.
FTSE 100 ends week on a high despite BoE economic warning
The FTSE 100 closed on a high on Thursday, up 1.4%, with the blue-chip index closing out the week in positive territory – rebounding after a disappointing performance last week.
Investors excitement over the prospect of lighter lockdown restrictions appears to have completely overshadowed the Bank of England’s dismal economic outlook for the UK economy in 2020 as a result of the Covid-19 crisis.
According to the BoE, the coronavirus pandemic could cause the UK economy to shrink by 14% in 2020. However, it also believes that the country can emerge from the crisis in 2021 and have a strong recovery.
‘The unprecedented situation means that the outlook for the UK and global economies is unusually uncertain,’ the BoE’s monetary policy committee said on Thursday.
‘It will depend critically on the evolution of the pandemic, and how governments, households and businesses respond to it.’
BoE Governor Andrew Bailey opted to leave interest rates at their record low level of 0.1% to assist the UK economy in coping with the economic impact of the Covid-19 crisis.
FTSE 100: technical analysis
The FTSE 100 has been regaining ground since last week's sharp decline into the 76.4% Fibonacci support at 5690, according to Josh Mahony, senior market analyst at IG.
Despite that sell-off, the uptrend remains intact for now, yet questions remain over whether the tide is slowly changing after significant gains since the mid-March low, he added.
‘Given the wider uptrend, the primary path for today is bullish, yet the gradual ascent seen this morning stands in stark contrast to the sharp decline at the turn of the month,’ Mahony said.
‘With that in mind, this rally may start to falter given the somewhat unconvincing nature of it. A break below the 5788 swing low would bring a more bearish outlook, with a bullish short-term outlook in play until then.’
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