FTSE 100 FINISH LINE 14/5/26
FTSE 100 FINISH LINE 14/5/26
Political Risk Bites Sterling, But Blue-Chips Hold the Line
The FTSE 100 traded with a firmer tone, up 0.4%, but the real story sat in UK macro risk rather than the index print. Sterling slipped after Health Minister Wes Streeting resigned, deepening the political pressure on Keir Starmer after Labour’s poor local-election showing. GBP/USD briefly fell to $1.3502, while EUR/GBP edged higher to 86.68p. The equity market absorbed the headline risk, but FX was less forgiving: the currency is now pricing in political instability first. Gilts were better bid despite the Westminster noise, with the 10-year yield down around 4bps to 5.03%, retaining recent gains after a sharp run-up in long-end borrowing costs earlier in the week. The market debate is now squarely fiscal: whether a weakened Starmer government or a more left-leaning successor implies higher spending, higher taxation or both. That matters because UK assets are already trading with limited fiscal tolerance, and any perceived loosening would likely reprice quickly through gilts, banks and sterling.
The macro data gave the bulls some cover. UK GDP surprised positively in March, rounding off a stronger first quarter and challenging the gloom around the domestic economy. But investors are reluctant to extrapolate. Economists warned that there could be inventory effects, as firms might start working faster before supply-chain disruptions and higher input costs caused by tensions in the Middle East. The Bank of England read-through is, therefore, messy: activity is stronger, but the durability is questionable, leaving markets still pricing multiple rate hikes while some economists expect the Bank to talk tough but ultimately sit on its hands. Single-stock dispersion was sharp. Legal & General surged 6.2%, the FTSE’s standout performer, on renewed takeover interest speculation. Autos rallied 3.2%, helping offset weakness in financials. By contrast, 3i Group fell 11.2% to its lowest level since May 2023 after slower momentum at key portfolio asset Action, dragging the investment-banking/investment-company bucket down around 3%. Banks remain politically exposed because Jamie Dimon warned that higher UK bank taxes could jeopardise JPMorgan’s London HQ investment plans. Finish line: the FTSE headline remains resilient, but UK domestic risk is no longer background noise — it is the trade.
TECHNICAL & TRADE VIEW – FTSE 100
Daily VWAP Bullish
Weekly VWAP Bearish
Above 10500 Target 11000
Below 10100 Target 9469
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!