FTSE 100 price forecast ahead of the BOE’s decision
- UK inflation remains in the double-digit territory as prices of food and clothing continue to rise
- The Bank of England to deliver another hike
- FTSE 100 found support at a previous resistance area
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This week is essential for financial market participants because three major central banks will announce their monetary policy decision. One is the Federal Reserve of the United States, which is scheduled to announce it later today.
Another is the Swiss National Bank, whose decision is due tomorrow. In light of the events in the Swiss banking sector that triggered a financial crisis, it matters what the SNB will do.
Finally, the Bank of England will decide its policy tomorrow as well. Earlier today, the UK annual inflation for February surprised to the upside, opening the gates for a new rate hike from the central bank.
The largest contributions to the rise in the prices of goods and services came from restaurants and cafes, food, and clothing. Inflation is entrenched in the UK economy, making it harder for the central bank to react.
The stock market was affected by the recent banking crisis. The volatility generated by bank failures in the United States and Switzerland triggered a wave of selling.
But despite dropping more than 800 points from the highs, the FTSE 100 picture looks constructive. Is it still safe to buy UK stocks?
FTSE 100 bounces from support ahead of the BOE decision
FTSE 100 had a rough time rallying in 2022. A year-long consolidation frustrated bullish investors.
The war in Ukraine weighs on European economies – including the UK. Also, the full impact of Brexit is still yet to be seen.
But as the US markets bottomed last October and the US dollar’s rally ended, so did the bearish bias for the FTSE 100. From the 6.800 area, the index rallied to a new all-time high above 8,000.
It was rejected there, but on the way down, it found strong support at the previous dynamic resistance area, which contained the price action in 2022. Therefore, it is fair to assume that the support will hold, and a new attempt to the all-time highs might be in the cards. For now, the 7.200 area acts as invalidation support for any bullish case.
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