FTSE Breakout Looming?

FTSE Stuck in RangeThe FTSE remains within a tight block of consolidation this week as the recent range persists for now. The index attempted a breakout higher earlier today but met selling resistance into last week’s highs. Dovish comments from BOE chief economist Pill yesterday are certainly seen as favourable for the index though have yet to provide enough of a catalyst for a sustained upward push. Pill signalled that the BOE could cut rates this year ahead of CPI returning to the bank’s 2% target.Bullish OutlookWith the prospect of BOE easing ahead, the outlook for the FTSE looks favourable. The market is widely expecting the bank to begin cutting by summer with pricing likely to be brought forward if CPI is seen resuming the downward trajectory we saw prior to December’s uptick. If that reading is seen to be a blip, easing expectations should take on greater focus, allowing the FTSE to climb as GBP eases off. However, if CPI moved higher still in January, this will no doubt muddy the outlook, dampening those easing expectations and putting the FTSE under fresh pressure.UK Data DueLooking ahead, next week will be a pivotal week for the market’s near-term BOE expectations and FTSE/GBP direction.  UK CPI, GDP and retail sales will offer plenty of volatility risk throughout the week with CPI in particular being closely watched on the back of Pill’s comments this week.Technical ViewsFTSEFor now, the index is holding just below the 7224.3 level resistance, sitting in the upper part of the 7254.1 – 7224.3 range. With momentum studies bullish, the focus is on a breakout higher and a continuation towards the 7939.2 level next. To the downside, mid-range support sits at the 7438.8 level, which bulls need to defend to maintain the broader bullish bias.