With ever increasing COVID19 cases, the UK is currently facing difficulties and the FTSE price is no exception. With Monday’s announcement that restrictions are about to end across all of England (and most of the UK), Boris Johnson has opened a veritable pandoras box.
The FTSE price has been on a consistent downtrend since 14 July where it fell from a high of £7110 to £7014 or a bit more than 1%. It recovered slightly to the $7035 mark this morning and looks poised to make further gains across the session. Anticipation for Monday’s re-opening will undoubtedly add some feelgood factor to the index but pitfalls remain.
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Short Term Forecast For FTSE Price: Uncertain Times Ahead
There are definitely major factors which will impinge on the FTSE price in the short term. Key of which is the July 19 reopening which although positive for businesses will inevitably see a considerable rise in Covid cases. These will have an effect on industry as more people will be pinged by the NHS app and will have to into quarantine.
With a 0.5% rise in today’s session, the FTSE is looking considerably bullish. Amongst the major firms reporting today, one finds Burberry Group and Rio Tinto with the former expected to recover after posting a drop in sales in the 4th quarter of 2020. The latter is expected to post strong results as the economic recovery gathers pace.
A good short-term prediction would be for the FTSE price to remain within the £7000-£7200 range. Whilst rising inflation remains a considerable concern, the BOE expects this to be only temporary and does not seem likely to impinge on growth. The next week should be interesting to observe how the FTSE price will react to reopening.
FTSE Long Term Forecast: Bullish But Economic Data Still Crucial
Although the long-term forecast for the FTSE remains bullish, there are several events coming up which might be a drag on the price. Inflationary pressure still remains a considerable worry although the BOE does not seem too concerned on this.
The jobs report should also prove to be important with many firms expanding their hiring as the economy re-opens. Brexit continues to be an issue with the recent haggling over the Northern Ireland protocol and the divorce bill sticking points that could be a further drag on markets.
As employment relief programmes expire in September, it will also be interesting to note what this will mean to the UK economy at large. All these factors will certainly impact the FTSE price long term.
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