FTSE 100 range trades as GBP/USD rally stalls and Brent crude price rises 

Macro update

Oil prices jump after Iran closes the Strait of Hormuz: Brent crude surged 4.1% to $79.11 a barrel after US and Iranian forces exchanged missile and drone attacks over the weekend, with Tehran targeting US military facilities across the Gulf and once again shutting the strategically important shipping route.

Dollar strengthens as markets price in further Fed tightening: The US dollar advanced against most major currencies as renewed concerns over energy-driven inflation increased expectations of additional central bank tightening, with fed funds futures now implying a 50.9% probability of two or more Federal Reserve rate hikes by December, up from 47.6% on Friday.

South Korean semiconductor stocks come under pressure: The KOSPI fell 7.6% as investors unwound leveraged positions in chipmakers, while SK Hynix dropped as much as 8.2% in Seoul following profit-taking after its shares rallied 12.8% during their Nasdaq debut on Friday.

Nikkei declines as higher oil prices weigh on sentiment: Japan's benchmark index fell 1.12% to 67,786.86 as rising energy costs clouded the corporate outlook at the start of the earnings season, with Kioxia sliding 8.92% and Yaskawa Electric falling 14.34% after reporting a 21.7% drop in first-quarter net profit.

Corporate earnings season gets underway: Major US banks, including JPMorgan Chase and Goldman Sachs, are due to report from Tuesday, with S&P 500 second-quarter earnings expected to increase 23.7% year-on-year, while Taiwan Semiconductor Manufacturing is scheduled to release results on Thursday.

Gold retreats as Treasury yields move higher: Spot gold fell 1.5% to around $4,060 an ounce as the surge in oil prices pushed two-year US Treasury yields to their highest level since early 2025, ahead of Tuesday's US inflation report and Federal Reserve Chair Kevin Warsh's testimony before Congress.

FTSE 100 comes off key resistance

Last week the FTSE 100 briefly overcame its April highs at 10,697-to-10,724 by rising to 10,745 before rapidly giving back its recent gains and slipping to 10,396. This level will remain in sight while Friday's high at 10,546 isn't overcome. If so, the 10,568-to-10,573 25 May-to-25 June highs may be retested.

A fall through last week's 10,396 low may lead to the March-to-July support line and the 22 June trough at 10,315-to-10,309 being reached.

Short-term outlook: bearish while below the 10 July high at 10,546

Medium-term outlook: bullish while above the 18 May low at 10,113. 

FTSE 100 daily candlestick chart

GBP/USD rally stalls

The recent advance in GBP/USD is running out of puff - having been rejected by resistance made up of the 11-to-15 June highs at $1.3433-to-$1.3461 - with the area around the 200-day simple moving average (SMA) at $1.3395 being revisited. While last week's low at $1.3322 underpins, though, the short-term uptrend remains intact.

Below this level minor support may be found between the mid-May to early June lows at $1.3306-to-$1.3303. Further potential support lies at the 22 June high at $1.3273.

Above $1.3461 lies the $1.3483-to-$1.3485 region, consisting of the late May and early June highs.

Short-term outlook: bullish while above $1.3322

Medium-term outlook: neutral while trading within its $1.3140-to-$1.3658 March-to-May range; failure at $1.3140 would be bearish and target the $1.3300 region

GBP/USD daily candlestick chart

Brent crude rallies further still

Brent crude's recovery from its early July $70.22 per barrel low is ongoing with last week's high at $80.21 on the cards and the 200-day simple moving average (SMA) at $77.73 acting as potential support.

In case of the $80.21 high being overcome, the 22 June high at $81.13 may be reached next. If also bettered, the mid-April low at $84.20 would be back in focus. While Friday's low at $75.26 underpins, immediate upside pressure is expected to be maintained.

Short-term outlook: bullish while above the 10 July low at $75.26

Medium-term outlook: bearish while below the 22 June $81.13 high

Brent crude daily candlestick chart