Inflation and Interest Rates Double Team on FTSE100

The FTSE100 is reeling from a back-to-back knock from inflation growth (now at 10.4% Year-on-Year from 10.1%) and a 25 basis point rate hike by the Bank of England. The FTSE100 (LSE: UKX) has its back against the wall after letting bearish momentum raid the index, leaving it 8.71% off its Year-to-Date peak.

The risk from the Banking Sector Crisis mounted on the index, which comprises 11.04% and 4.21% of banks and financial services companies, respectively. Bearish traders have their stars aligned as equities face pressures from all corners.


Following the breakout below the ascending channel pattern and the 100-day moving average, the UKX shifted into a downtrend, leaving the 7876.75 level as resistance. A rejection of the 7211.85 price level led the index higher, marking the level as support. However, before bears swept in, bullish traders lost their footing at the 50% Fibonacci Retracement or the 7575.42 level.

With bears in control, price will likely be headed toward support at the 7211.85 level. If the bearish momentum fails to give, a high volume breakout below the 7211.85 level could signal another leg down, with bears likely finding interest in the 7092.03 level.

However, bulls will probably be enticed by the 7211.84 level if the price approaches it on declining volumes, signalling the wearing out of bearish momentum. The 7575.42 level could be of high relevance to bullish traders.


The U.K.’s macroeconomic conditions have made it difficult for equity valuations to stay afloat. Concerns over higher borrowing costs and subdued growth prospects due to higher interest rates have left a gloomy outlook. At the same time, the banking sector crisis is fuelling risk-off sentiment. The FTSE100 (LSE: UKX) is likely to be weighed down further by the concoction of the aforementioned, leaving the 7211.85 level probable.

Sources: FTSERussell, TradingView