FTSE 100 Set for Fourth Day of Gains

Piece written by Alexa Smith, Trive Financial Market Analyst 

The FTSE 100 (LSE: UKX) marked its fourth consecutive session of gains this morning after the UK unemployment rate shed insight into the Bank of England’s policy direction. The United Kingdom witnessed a 0.1% uptick in its unemployment rate from 4.2% in July to 4.3% in August, coinciding with a reduction of more than 200000 jobs within the economy. 

Nevertheless, there was an unexpected silver lining in the form of wage growth, which surged to 8.5%, bolstering arguments in favour of further interest rate hikes despite signs of softening within the labour market. With UK GDP data expected tomorrow, the index futures may gain upside traction as the year-on-year GDP is expected to grow by 0.4% in August from 0.9% in July, exhibiting an overall decline. 

Técnicos 

A descending triangle pattern became evident on the 4H Chart after a swing high met with the triangle’s upper boundary, edging the price action lower towards the all-important 7233.95 support. A recent upswing took the index futures within reach of the 50-day moving average line, which held firm before encouraging the price action to cushion at the 7418.17 support, the 23.60% Fibonacci Retracement.  

Since the index futures surpassed the 50-day moving average, the price action may attempt to retest the upper boundary of the descending triangle if the 7532.13 resistance level is broken down. However, the 7532.13 resistance could hold and bolster the index futures towards the 7418.17 support. In this case, a breakdown of the 7418.17 support may mark a pivot point for a downtrend, urging the price action towards the 7233.95 support.   

Resumen 

A rise in UK unemployment could prompt the BoE to pause in its next monetary policy meeting, thereby bolstering the FTSE 100 into the green. If GDP data enforces the upside momentum, the index futures may attempt to retest the upper boundary of the descending triangle. However, the 7532.13 resistance could hold and spur the index futures towards the 7233.95 support. 

Sources: TradingView, Trading Economics