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The UK Index remains on the back foot, albeit off its 7650 lows. It is once again a victim of GBP strength after USD sold off, in spite of a hawkish Fed update. Stronger than expected May UK retail sales also served to bolster UK inflation expectations and the likelihood of BoE rate hike. While USD weakness is helping oil prices to Energy names, disappointing overnight China data is weighing on metals and Miners ahead of the latest policy update from the European Central Bank. This could include timing for the end of its QE bond buying stimulus programme, but Draghi may just say it was “discussed”.
Contributors: UK 100 -35pts, dragged lower by ULVR (warning about Brazil, to lose UK Index listing), Miners (China data), DGE/BATS (GBP strength), RELX (breakdown, UBS downgrade), HSBA (heavyweight), and PSN (ex-dividend). Insufficient buoyancy from the likes of GSK (drug success, generic competitor rejected), RR (restructuring, job cuts, reiterates cash flow guidance), BP (heavyweight, higher oil price), BT (breakout from range), VOD (US telecoms M&A) and BARC/LLOY (bounce off lows).
Technicals: The UK 100 has bounced off 7650, extending a trend of shallow rising lows since late May.
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The UK 100 has bounced off 7650, extending a trend of shallow rising lows since late May.
Watch levels: Bullish 7695, Bearish 7650
Solid Green line
Possible support
Solid Red line
Possible resistance
Important: The information provided above does not constitute advice or opinion and must only be regarded as technical observations.
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