GBP/USD, FTSE 100 and FTSE 250 Futures Trading - Monthly Review October 2010
The regular monthly spread trading review from IG Index.
The Month Ahead
Strong GDP News May Limit New Quantitative Easing Expectations
There was plenty of economic news throughout October for traders to get their teeth into that could well shape the direction of markets in November.
In the UK, the comprehensive spending review came in pretty much as expected and market reaction was muted. But there was a surprise for the latest UK GDP: growth of 0.8% in the previous quarter was double what had been expected, while US GDP released at the end of October came in exactly in-line with economist forecasts.
It’s likely that the actions and musings of the various central banks will remain in focus throughout November.
Stock markets had been lifted in recent weeks by broad hints from the US Federal Reserve and the Bank of England that they would step in with more quantitative easing if required. However, now some investors may feel that the strong performance by economies will reduce the likelihood of this.
The next bank of England decision on rates, and maybe further information on its QE stance, is expected on 4 November. The all important minutes from the meeting will be published on 17 November. When this information is released, volatility across markets, particularly the forex spread trading markets, would not be a surprise.
GBP/USD Spread Betting Market News
Sterling Reaches 8 Month Highs
The recovery in the GBP/USD spread betting market continued into early October with the currency pair trading above $1.6100 for the first time since January this year.
Although there was very little movement while Chancellor George Osborne was announcing the coalition government’s cuts on the 20th October, the Pound has since made gains against the US Dollar.
There were no real shocks in the announcement and the driver over the next few weeks is likely to be how likely further intervention, in the form of quantitative easing, is from the Bank of England.
Overall GBP/USD still seems to be broadly hanging onto its five month recovery but some will want to see it decisively clear the $1.6100 mark to show there is still some momentum left.
FTSE 250 Financial Spread Betting Update
FTSE 250 Outperforms Senior UK Index
The FTSE 250 index is maybe overlooked by many of us in favour of its big brother, the FTSE 100, but arguably the 250 gives a better indication of the fortunes of UK plc. This is mostly because so many of the larger blue chips that make up the FTSE 100 derive a significant portion of earnings from overseas.
During October, the FTSE 250 pushed out to its best levels since May 2008.
With the FTSE 100 still trapped below its highs for the year, they should be an interesting pair to watch into November.
There has been concern that some of the ‘second line’ UK firms would be feeling the pinch following the latest public sector cuts but the market does not seem to be reflecting that sentiment at the moment.
The above comments do not constitute investment advice and neither IG Index nor Clean Financial accept any responsibility for any use that may be made of them.
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'GBP/USD, FTSE 100 and FTSE 250 Futures Trading - Monthly Review October 2010' edited by IG Index, updated 03-Nov-10
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