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Hugo in HTO Trading,

FTSE100: Sentiment has improved

Growing confidence in the British service sector at highest point in 14 years, companies and professional services reported that levels of business volumes and values were significantly above normal with a survey printing a record high, reflecting the strongest growth in business volumes since 2001.

Exports and business investment helped the UK economy expand in the second quarter, according to official figures that confirmed a pick-up in growth after a sluggish start to the year.

The Office for National Statistics (ONS) said Gross Domestic Product (GDP) rose 0.7% in the three months to the end of June, unchanged from an estimate made a month ago but an obvious acceleration on 0.4% in the first quarter. Further details from the ONS last week showed that net trade made its biggest contribution to growth for 4 years.

Since the beginning of the year the FTSE 100 fell more than 4.0% and is in a bearish phase since late July. Last week the Index initially plunged making a new low for the year at 5,760 but found enough buying pressure to turn around and closed in the green, near the high of the week, just below the 200-week moving average. Stochastic is showing a bearish momentum and is below the 50 mid line.

Expecting an upward move to a key level at 6,441 on a break above the weekly resistance at 6,277.5 (scenario 1) or a break below the weekly resistance at 6,042 could throw the Index downward to year low at 5,760 (scenario 2).

UK100 is a CFD written over FTSE 100 futures.