European close: FTSE extends daily losses on Brexit shambles, UK data and RSI points to further losses below Dec 2016 support
- The U.K.’s FTSE 100 UKX, fell by -0.83%, or by 56.57 points to 6721.54 while European markets, in general, were weighed by ongoing domestic political and global economic risks as Brexit and trade maintain the front page headlines.
The FTSE was initially supported on the news that a key parliamentary vote on Brexit had been cancelled on Monday that was scheduled to take place Tuesday. However, in a bid to protect her ambitions of taking the UK out of the EU under a Tory leadership, PM May, who is already facing the possibility of a vote of no confidence and who's Brexit draft has been vocally rejected by a likely majority in the Commons, cancelled the vote at the eleventh hour .
May cited "widespread and deep concern" on the Irish border backstop facet of Brexit. "Backstop is now an uncomfortable arrangement for the EU," she said when addressing the UK's House of Commons when announcing a delay in the Brexit pact vote in order to give her time to look at new ways to empower the House of Commons and make sure the backstop isn't in place indefinitely. However, the market's take on this shambles is negative and see the government losing control.
- GBP/USD sees 1.2506 traded, lowest since April 2017, bears now looking to April lows
UK data disappoints
Adding to the doom and gloom, data out earlier from the Office for National Statistics showed that UK economic growth remains very sluggish, held back by an unexpectedly steep decline in manufacturing activity. Gross domestic product in October increased by 0.1% compared to the preceding month. On a three-month basis, GDP growth in the period from August to October slowed to 0.4%, from 0.6% in the three months to September, which also matched the consensus forecast. Industrial production unexpectedly fell 0.6% month-on-month, dragged down by a 0.9% collapse in manufacturing output. The manufacturing decline reflected a big drop in pharmaceuticals output and slower car production. Year on year, industrial production was down 0.8% in October after being flat in September, while manufacturing was down 1.0% after rising 0.5% a month ago.
- Support levels: 6675 6653 6572
- Resistance levels: 6789 6844 6925
The daily pin bar is a warning to bulls with bears in control within this series of daily losses with bearish RSI and no divergence, pointing to further declines below the Dec 2016 lows at 6680. Bulls need to get above the pivot point that was located at 6861 while R1 is located at 7050 and the 2018 range 23.6% level is located at 7100. The 38.2% Fibo of 2018's range at 7262 is the critical objective thereafter.