FTSE 100 trades sideways as UK retail weakens: forecast and levels

According to the November retail sales report from the British Retail Consortium (BRC), the sector remains under pressure and hopes for a strong boost from Black Friday promotions did not materialise. In fact, the reading fell to a six-month low. Total sales grew by 1.4% year-on-year, including a 3.0% increase in food sales and just 0.1% in non-food, where in-store volumes declined by 0.3% and were only offset by a 0.5% rise in online sales, the strongest since 2022. Investors are also reacting to survey results from UK employers over the same period, conducted by KPMG International Ltd.: the number of permanent positions continued to fall, albeit at the slowest pace since July 2024. Analysts believe that a challenging macro environment and uncertainty over tax indexation in the new government budget have led companies to freeze hiring, with management taking a wait-and-see stance while they reassess strategic direction.

The shift of capital away from equities is also reflected in rising bond yields. The popular 10-year gilt is trading around 4.529%, above last week’s 4.493%, while the more conservative 20-year bond yields 5.152% versus 5.112% previously.

Among current FTSE 100 gainers are Babcock International Group Plc (+2.62%), Scottish Mortgage Investment Trust Plc (+2.34%), Rolls-Royce Holdings Plc (+2.07%) and Pershing Square Holdings Ltd (+1.60%).

On the downside, notable decliners include Barratt Redrow Plc (–3.97%), JD Sports Fashion Plc (–3.77%) and Unite Group Plc (–3.77%).

Support and resistance levels

On the four-hour chart, the index is attempting to move closer to the support line of the ascending channel, which is currently framed by 10000.0 and 9550.0.

Technical indicators are weakening their already fragile buy signal: the Alligator indicator’s EMA range is gradually narrowing, while the Awesome Oscillator (AO) histogram is forming corrective bars in positive territory.

Resistance levels: 9740.0, 9970.0.

Support levels: 9535.0, 9260.0.

FTSE 100 forecast and trading scenarios

Long positions may be considered after the index rises and consolidates above 9740.0, with a target at 9970.0 and a stop-loss at 9650.0. Implementation horizon: 7 days or more.

Short positions may be considered after the index declines and consolidates below 9535.0, with a target at 9260.0. Stop-loss — 9600.0.