European Open: GBP approaches 2020 low ahead of UK PM announcement

Asian Indices:

• Australia's ASX 200 index rose by 14.3 points (0.21%) and currently trades at 6,843.00
• Japan's Nikkei 225 index has risen by 1.713 points (0.01%) and currently trades at 27,652.55
• Hong Kong's Hang Seng index has fallen by -248.85 points (-1.28%) and currently trades at 19,203.24
• China's A50 Index has fallen by -133.74 points (-1.01%) and currently trades at 13,163.87

UK and Europe:

• UK's FTSE 100 futures are currently down -71 points (-0.97%), the cash market is currently estimated to open at 7,210.19
• Euro STOXX 50 futures are currently down -107 points (-3.02%), the cash market is currently estimated to open at 3,437.38
• Germany's DAX futures are currently down -395 points (-3.03%), the cash market is currently estimated to open at 12,655.27

US Futures:

• DJI futures are currently up 88 points (0.28%)
• S&P 500 futures are currently up 17.75 points (0.15%)
• Nasdaq 100 futures are currently up 9.25 points (0.24%)

• Take note that it is a public holiday in the US and Canada today, so their equity cash markets will be closed
• Final PMI’s (from S&P global) are released for Europe
• UK’s next PM to be announced at 12:30 BST
• The US dollar continued to rise overnight

Liz Trussed tipped to become the next UK Prime Minister

At 11:30 BST today it is expected that Liz Truss will be named as the next PM of Britain and successor to Boris Johnson. But whoever takes the helm next faces double digit inflation, a multi-quarter recession and worryingly high energy prices. So against that backdrop it seems unlikely we’ll see a sustainable rally for the pound when the next PM is announced.

But that’s not to say we won’t get a bounce at all – at least soon – as it continues to grind its way down to the 2020 low, which is a key support level to say the least. However, the US dollar has continued to rise overnight with the dollar index back above 110, USD/CNH rising to its highest level in 13-months and EUR/USD currently probing its August low around 0.9900.

GBP/USD daily chart:

GBP/USD is currently within its seventh bearish day and just 53 pips above the March 2020 low. As such big levels break upon their first retest, it’s possible I could tempt some buyers to the table is the level is briefly touched or even breached. But 1.1414 is likely to be a level which prompts some volatility, regardless of which way it eventually moves.

FTSE 350 – Market Internals:

FTSE 350: 4033.38 (1.86%) 02 September 2022

• 309 (88.29%) stocks advanced and 38 (10.86%) declined
• 1 stocks rose to a new 52-week high, 45 fell to new lows
• 22.29% of stocks closed above their 200-day average
• 95.71% of stocks closed above their 50-day average
• 5.14% of stocks closed above their 20-day average

Outperformers:

• + 16.9% - Bridgepoint Group PLC (BPTB.L)
• + 9.06% - Ashmore Group PLC (ASHM.L)
• + 7.45% - Abrdn PLC (ABDN.L)

Underperformers:

• -3.47% - Redrow PLC (RDW.L)
• -2.99% - XP Power Ltd (XPP.L)
• -2.70% - Berkeley Group Holdings PLC (BKGH.L)

Economic events up next (Times in BST)

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