FTSE 100 Supported by Weak Pound and Caution, It's Not One Way Traffic

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FTSE 100 Supported by Weak Pound and Caution, It's Not One Way Traffic

FTSE 100 Supported by Weak Pound and Caution, It's Not One Way Traffic


The Market and Political View from Adam Jepsen, Founder, Financial Spreads.


The lack of post referendum clarity is creating an opaque view of the future that will keep investment in UK PLC on hold.

With all the unanswered questions we are likely to see an extended period of volatility in UK focused markets like EUR/GPB, GBP/USD and the FTSE 100.

The aftershocks of the EU referendum are unlikely to be as explosive as the initial moves we saw on Friday but they will continue for a long time.

- - - - Multiple Sideshows - - - -

The multiple sideshows run by the Conservative Party, Labour Party, Scottish National Party and EU will only add to the uncertainty and prolong the volatile markets that so many investors like. Also see the UK has no Plan B (and there was no Plan A either).

Trading re-opened at 10pm last night (Sunday, 26 June) and we have seen quick moves in both EUR/GBP and GBP/USD.

Sterling already has lost another 4.5 cents. GBP/USD is trading down at $1.323.

The euro has already gained 2 cents versus the pound. EUR/GBP is trading higher at 0.833.


- - - - FTSE 100 Supported by Weak Pound - - - -

FTSE 100 Futures opened nearly 50 points (0.8%) down at 5955.

However, the index has already recovered and is trading 50 points up on Friday's close. It's currently around the 6060 mark.

The 'strength' we are seeing in the FTSE 100 is probably due to the weak pound.


- - - - Traders Beware: Big Cats Bouncing - - - -

Market swings remain quick and sizable.

Investors should not assume it's one way traffic.

There will be plenty of retracements and dead cat bounces to catch out anyone not on their toes.

These quick moves are the sort than can panic investors into making poor decisions.

If you are trading, then using smaller trade sizes than usual can help take the pressure off (even if it doesn't, it will reduce your risk).


By Adam Jepsen, 27 June 2016


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