FTSE Holds Near Highs

The FTSE is sitting just below last week’s highs as we begin the new week. The index was seen breaking out to its highest level since Feb 2023 last week as the BOE gave firmly dovish signals at its latest monetary policy meeting. Speaking on the back of a fresh fall in inflation, BOE’s Bailey signalled that the bank expected to press ahead with rate cuts, likely before the summer. In an interview with the UK Financial Times on Friday, Bailey went on to say that the bank expects several rate cuts through the year.

BOE Rate Projections Shifting

Ahead of the meeting, traders had been pegging August as the likely date for initial BOE easing. However, on the back of the meeting and subsequent interview, pricing for a June/July hike has started to rise. With this in mind, traders will be keeping an eye on incoming UK data and BOE commentary with any further dovishness likely to support the FTSE near-term as GBP continues to weaken.

What to Watch

Looking ahead this week, we have little in the way of tier-one data and a holiday shortened schedule due to the Easter break. However, traders will be looking to Thursday’s current account data and final GDP readings as the key data to focus on. We also have MPC’s Mann speaking later today. More broadly, FTSE will also be tracking risk flows linked to movements in USD this week.

Technical Views

FTSE

The rally in the index has stalled for now ahead of the 8023.5 level. However, with momentum studies bullish, the focus remains on a breakout above this level while 7811 holds below as support. Above 8023.5, the index will be moving in unchartered territory at fresh, all-time highs.