FTSE Holds at Highs

The FTSE is holding just below the all-time highs on Monday, following a breakout move to fresh highs this month. Expectations of forthcoming UK easing are helping underpin bullish sentiment here, as is the broadly positive tone to risk appetite on the back of growing Fed easing expectations. The continued softening of UK inflation is cementing market expectations of a summer rate cut from the BOE.  

Dovish BOE Commentary

Speaking today, BOE board member Broadbent further endorsed this outlook, telling traders that if the UK economic picture continues to develop as expected, summer rate cuts look very likely. Making his last speech at the BOE after a 13-year career there, Broadbent said that the decision to begin easing will very much depend on stickiness in wage growth. He explained that the BOE is looking for second-round inflation pressured to recede enough to allow it to begin easing. Speaking last week, BOE governor Bailey gave a hint that easing might be coming as early as next month should data support such a move. While this narrative holds, the FTSE looks likely to continue higher near-term, particularly if inflation continues to soften paving the way for further BOE easing beyond the summer starting point.

Technical Views

FTSE

The rally in the FTSE has seen the index breaking out above the 8023.5 level with price now testing bullish trend line resistance. Momentum studies remain bullish here, keeping the focus on further upside near-term. Looking further out, while some correction is to be expected, the outlook remains bullish while price holds above 8023.5.