22nd May 2019
The pound has snapped a record 11-day losing streak against the euro after Theresa May offered MPs a vote on a second referendum but only if they back her deal. Sterling rebounded from a three-month low versus the euro but gave up most of its muted gains as the prime minister warned that a second referendum would lead to a “nightmare future of permanently polarised politics”. It was on a record-breaking slump against the euro amid fears that a Brexiteer winning the Conservative leadership race would boost the odds of a no deal Brexit or a general election.
The pound jumped as much as 0.6pc versus the euro to an intraday high of €1.1460 before pulling back. Sterling returned to flat territory against the dollar at just above $1.27 as Tory Brexiteers and the DUP voiced their opposition to Mrs May’s new proposal.
The pound’s rebound from a four-month low against the dollar curbed the FTSE 100’s gains late in trading. Unfortunately this was at 7370, rather than the 7380 resistance level! The sterling rally put pressure on London’s big overseas earners with the index giving up most of its gains to close just 0.3pc higher.
Trump’s Huawei Hold Off
President Trump held off on blacklisting Huawei on concerns it could disrupt China trade talks and only took action after discussions stalled, people familiar said. Plans were on the table for months but the decision to curtail the company’s access to American suppliers set off a scramble to implement. Some national security officials are concerned Trump could scrap the order to resuscitate bilateral negotiations. A U.S. official said European nations are coming around to the severity of the threat posed by Huawei.
Stocks Bounce Back
Asian stocks looked set to track an advance in U.S. equities as the China trade war remained the focus of investor attention. The Nasdaq climbed more than 1% after the Trump administration granted limited relief for companies doing business for Huawei Technologies, boosting chip shares. The dollar was largely higher, with the yen and kiwi pacing losses. Treasuries edged down, oil advanced and gold retreated.
May’s Brexit Gamble
Theresa May made a new — and likely final — Brexit offer, but her efforts looked doomed. The U.K. Prime Minister said Parliament will have a choice over EU customs union arrangements, and the government will give MPs a vote on whether her deal should be put to a referendum. Die-hard Brexiteers aren’t happy, while Jeremy Corbyn said Labour won’t support the “repackaged version of the same old deal.”
FTSE 100 Trading Signals, Forecast and Prediction
The daily resistance levels have moved down a bit now following the failure to reach the 7380 yesterday and are showing at 7370 and and 7395. The 2 hour chart remains bearish for the moment but the bulls will be keen to break above the 7362 level today. Looking at the daily chart we have the top of the declining 20 day Raff channel at 7397, and the coral has also now gone red with 7434 resistance from that. As such, I am thinking that should we rise to this area then we may well see a stutter here today/tomorrow.
Overnight has seen a bit of consolidation around the 7345 area, however we could easily have an initial dip down to the 7320 area and yesterday’s low, where we also have the 200ema on the 30min to act as support along with S1. Should that break then a drop down to 7282 (S2) with 7260 looking key below that. I am thinking that a break of 7260 starts to look a lot more bearish, and a test of the 7200 area looks likely, where we have the bottom of the 10 day Raff channel. Below this then 7224 and 7180 start to come into play.
For today though, I am thinking that we get an initial dip down to that 7320 support area and then a bit of a bounce. It’s still all eyes on the US/China trade war really, and traders are awaiting further developments. The daily moving averages are also showing support at 7320 and 7330, though its an unconfirmed level on that time frame.
Assuming that the 7320 area does hold, then I am looking for a rise towards the 7360 and possibly the 7395 level. On the news front today we have Draghi talking at 08:30, and then UK CPI data at 09:30. Later this evening we have the FOMC minutes at 7pm, and also rumour that the US is contemplating blacklisting as many as 5 Chinese surveillance firms.
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