FTSE Continues 3-Day Rally Despite Poorer than Forecast Economic Data
GDP and Industrial Production show unexpected declines, foreshadowing Chancelor Reeves’ October budget
- GDP contracts 0.1% MoM
- Industrial Production down 0.9% MoM
- Technical still bullish
The FTSE continued higher this morning, trading up by 0.49% on the day, despite negative economic data. JD Sports and EasyJet lead the rally, up by 2.95% and 2.51% respectively.
Economic Activity Contracts in January
Today’s GDP data showed an unexpected contraction in economic activity of 0.1%, analysts had forecast and expansion of 0.1%.
This decline made YoY GDP rise less than expected at 1.0% compared to forecasts of 1.2%.
The National Office of Statistics said the decline in GDP was due to a sharp contraction in industrial output.
Analysts had forecasted Industrial Output to contract by 0.1%, but figures published today showed a contraction of 0.9% MoM.
Manufacturing production also took a hit in January, dropping sharply by 1.1% MoM.
The Chancellor had presented the national budget in October 2024 as the way forward to revive a stagnant economy.
However, results have been mixed, and today’s data has put a dent into her assumptions of economic growth.
FTSE Live Chart
FTSE Technical View
The day chart below for the FTSE shows a market that is still in a bull trend, with price action bouncing off the Ichimoku Cloud.
The double top formation that occurred between February and March led way to a sharp correction.
The retracement has found support on the cloud and keeps the bull trend intact. The next main resistance level is at 8,834 (blue line), where the double top pattern formed.
To the downside, the next support level is at 8,481 (orange line), which corresponds to a previous all-time high which led to a correction.
Below that level, the next strong support comes from the belly of the cloud at 8,419 (red line), which also coincides with the high of a previous wide sideways range.
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