FTSE 100 resumes ascent as GBP/USD stabilises and US natural gas prices rise

Macro update

Asian equities ease as investors rotate out of AI stocks: Japan's Nikkei declined 0.6%, South Korea's KOSPI fell almost 2%, and MSCI's broad Asia-Pacific index slipped 0.3% as investors shifted away from AI-related shares towards more defensive and cyclical sectors.

Oil prices edge higher amid renewed Middle East tensions: Brent crude rose 0.8% to around $72.50 a barrel and WTI gained 1.3% to $70.11 after fresh US-Iran military strikes highlighted the fragility of the interim peace agreement and once again disrupted shipping through the Strait of Hormuz.

US and Iran return to negotiations following renewed clashes: Diplomatic talks resumed after both countries exchanged military strikes over the weekend, including Iranian missile and drone attacks on US military facilities in Kuwait and Bahrain, marking the most serious escalation since the interim peace deal was reached.

AI-related chipmakers come under renewed pressure: Memory chip producer Kioxia fell 7.5% and SoftBank Group dropped 5.4% in Tokyo after the Philadelphia Semiconductor Index slid 5.3% on Friday, amid concerns that memory chip prices may have risen too far.

Gold remains on course for a fourth straight monthly decline: Spot gold slipped 0.6% towards $4,060 an ounce as higher oil prices and expectations of further interest rate increases weighed on demand, leaving the metal on track for an over 10% monthly loss and its steepest quarterly decline since 2013.

Dollar stays close to one-year highs as rate expectations build: The dollar index held around 101.25 as markets continued to price in at least one Federal Reserve rate increase this year, while Bank of America strategists forecast three hikes, with the yen remaining near a 40-year low around 161.80 per dollar.

FTSE 100 heads towards key resistance

Last week the FTSE 100 saw four straight days of gains before Friday's sell-off but this week seems to have kicked off with the resumption of the uptrend.

While Friday's low at 10,404 underpins, the recent highs at 10,568-to-10,575 are expected to be revisited. If exceeded, the April record high at 10,724 would likely be back in sight.

Minor support is seen in the 10,494-to-10,471 region, consisting of the 10 March and 6 May highs.

Short-term outlook: bullish while above the 26 June low at 10,404

Medium-term outlook: neutral with a bullish bias while above the 18 May low at 10,113 but below the 25 June 10,575 high; a rise above this level would re-instate the long-term bull trend and target record highs. 

FTSE 100 daily candlestick chart

GBP/USD bounces off key support

GBP/USD's recent decline took it marginally below its $1.3160 low - to its 24 June seven month low at $1.3140 - before recovering. While this low holds, a gradual recovery may take the cross to its 22 June high at $1.3273 in the first instance, above which lies the more significant $1.3303-to-$1.3306 resistance area, made up of the mid-May-to-8 June lows.

Minor support sits between the 6 April and 19 June lows at $1.3178-to-$1.3163. Failure at the next lower $1.3140 recent low would open the way for the late October 2025 trough at $1.3097 to be reached.

Short-term outlook: bearish while below $1.3461 but is trying to stabilise above $1.3140

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

GBP/USD daily candlestick chart

US natural gas futures prices grind higher

US natural gas futures continue to gradually advance towards their recent 322.8-to-323.8 late May-to-early June peaks while oscillating around the 200-day simple moving average (SMA) at 314.6.

A rise above last week's 319.4 high would likely engage the recent highs, a rise above which may lead to the early February high at 332.4 to be reached next.

Immediate support is to be found between the 10-to-17 June highs at 311.7-to-310.4. While the 24 June low at 297.2 holds, bullish pressure retains the upper hand.

Short-term outlook: bullish while above the 24 June low at 297.2

Medium-term outlook: bullish while above the 15 Jun low at 286.2

US natural gas daily candlestick chart