FTSE Not Out of the Woods Yet

The bigger the drop, the bigger the rebound. That is what has happened with the FTSE 100 index in the aftermath of the UK's vote to leave the EU. In fact, the rebound has been so profound that the index has nearly made good all the losses suffered since the Brexit vote. Clearly, some investors who were lucky enough to come through the Brexit-stimulated drop relatively unscathed may now use this opportunity to either cut or reduce their stocks holdings or at least hedge their exposure by shorting the FTSE. This could especially be the case since we are approaching month-end; it would not look good on money managers who hold stocks in sectors that dropped massively post the Brexit vote. Added to this, bearish speculators who missed the original plunge may be tempted to step in and ride the next potential drop. So the FTSE could easily turn back lower.

POUND REMAİNS WEEK AS CONFİDENCE REACHES RECORD LOW

The Great Britain strengthened a little yesterday as the retail sales rose last month, but the currency hasn't been able to retain its upward momentum and currently moves without a clear direction.

The volume of the UK retail sales increased 0.6 percent in October from September, following the 0.5 percent increase in the preceding month. That’s much better than market expectations of a 0.2 percent drop. The value of the sales rose 0.7 percent. The report noted that small stores performed better than larger ones.

POUND NOT ABLE TO PRESERVE ONE PARTICULAR-WAY MOVEMENT TO UPSIDE

The Great Britain closed lower today despite another positive economic report that added to evidences of recovery in the United Kingdom. Forex traders were concerned that the currency was going too long in one direction.

Public sector net borrowing excluding temporary effects of financial interventions was at £13.2 billion in August. It was £1.3 billion lower than the budget deficit of £14.4 billion a year ago. Analysts have predicted slightly higher reading.

POUND DOWN ON WEAKER THAN EU OUTLOOK

The pound started the week down versus the euro and the U.S. dollar as sentiment towards other wealthy nations in the world remain more positive than the U.K.’s economic perspectives, forcing investors to abandon pound priced assets to inject capital in more attractive currencies backed by fast recovering nations.