FTSE Flat on the Day, Awaits Inflation Data Tomorrow

New all-time highs from the U.S. stock markets were not enough to give a boost to UK stock prices.

The DOW and the SP500 both posted new all-time highs overnight, but the rally across the pond has had little effect on the FTSE. The market is more concerned as to just when the BoE will cut rates.

The next MPC meeting for the central bank is on August 1, and the governor has repeatedly stated more data is necessary to make the decision on cutting rates. Tomorrow we are expecting inflation data to remain unchanged.

Last month’s Core Inflation was 3.5%, most analysts expect that number to remain the same. While the broader Inflation data was at 2% last month and is also expected to remain at the same level.

Many pundits are doubtful the BoE will cut rates before the Fed, so a cut at the next BoE meeting seems ruled out. Cutting rates before the Fed would have an impact on the pound and create imported inflation pressure.

The focus then shifts to the September meeting, and the likelihood of the Fed cutting rates. Fed Chair Powell wouldn’t give any clues yesterday in a questions and answers session.

Simply sticking to the statement that more data is necessary to confirm the downward trend of inflation.

Powell did mention that the trend for inflation is positive, and a cooling jobs market may help the Fed take the decision to cut rates in September.

Technical View

The day chart below for the FTSE shows a market in a sideways trend, trading within the Ichimoku cloud. The RSI has been hovering around 50 for the length of this trend, indicating the lack of momentum.

The market trended down on a correction from the all-time high of 8,481 (orange line), and for that bullish trend to reestablish itself we would need to see the market close above the cloud.

The next resistance is the top side of the cloud, which also coincides with a double top printed at the cloud (blue line).

Further resistance is at the previous failed attempt to rally higher of 8,366 (red line). To the downside the support come from the bottom of the cloud and the dip of 8,103 (green line). Should both break then the next support is at the previous high of 8,049 (black line).