FTSE in the red heading into the weekend

The FTSE 100 is trading lower by around 25 points this morning, with the market on track to post its lowest closing level in over a month. A rise in the pound has not helped stocks in London this morning with sterling seeing some moderate appreciation as the government's standpoint on Brexit is seemingly softening.

“Serious and fair offer” shows change in May’s approach

News that UK PM Theresa May has proposed offering around three million EU citizens living in the UK a “settled status” which would allow them to stay after Brexit has been seen as a further softening of her stance in negotiations with the EU. The proposals were unveiled at a Brussels summit but are dependent on EU states guaranteeing Britons the same rights. Since Brexit negotiations began on Monday this is the second apparent concession from the UK and further suggests that the hardline approach being talked up prior to the recent election has been shelved in favour of a softer approach. The latest development has been warmly greeted by GBP traders with moderate gains seen this morning but the currency remains in an indecisive mood with contrasting comments from BoE members this week leaving a cloud of uncertainty as to the future path of interest rates.     

FTSE growing increasingly vulnerable

Shares in London are lower once again this morning and the market is looking increasingly vulnerable going forward. There were early warning signs of weakness on Tuesday with stocks sliding, despite a substantial drop in the pound and if blue-chips end the day around current levels it will mark three successive lower closes since then. Several technical indicators are signalling that the recent uptrend is under threat and with price not far above a potentially key support level another leg lower could see the sell-off accelerate. With signs that consumer spending in the UK has begun to slow amidst an uncertain political and economic backdrop, there are fundamental arguments to be made for lower prices. The indecision amongst BoE members with regards to the appropriate path of monetary policy is also a concern to stock market bulls with rising prices severely testing the tolerance of the rate-setting committee to above target inflation. Whilst there are ample reasons to call for a correction in the FTSE, the market remains in an uptrend for now, but another 50 points or so to the downside would threaten this and test the mettle of investors who have enjoyed a significant ride higher in the past two months.