Brexit still grabbing attention. Pound jury out. Greenback softer.
Wednesday 30 December 2020
Greetings one and all. I trust the break has served you well and you have had a good Xmas despite all the restrictions.
Today the UK Parliament reconvenes at 09.30 GMT and a vote to approve the Brexit deal is due around 14.30 GMT before it then moves to the Upper House. It appears now that despite some discontent the government has enough support for a Yes vote on the basis that a deal is better than no deal. Meanwhile the EU's 27 members have agreed to it in principle but the EU Parliament will not get chance to fully ratify it before tomorrow's deadline.
So is that the last we will hear the word Brexit? Sadly not. The jury is still out on the full impact of the detail and how much the practical implementations will impact and the Pound is still making its mind up understandably. I do think it's Brexit-lite as I warned and serves more as a face-saving deal for both sides but definitely some fundamental changes, albeit not all that Leavers would have wanted at this stage.
Meanwhile we've seen a softer USD helped by some USD sell signals for month/year end flows but the signal to buy GBP is still the weakest of the G10 currencies given the strong performance of the FTSE. The UK has approved the Astra-Zeneca vaccine at the same time that its reports 50,000 new cases in a day for the first time and the US reports its first cases of the new variant and Germany reveals a record 1000 COVID deaths in a day. Sad and disturbing times still.
GBPUSD has seen some good two way business again finding support at 1.3420 after failing above 1.3600 but now rallying to test 1.3580 again on the softer USD tones and some general GBP demand.EURGBP has found a cap into 0.9100 (GBPEUR demand at 1.0990) after a strong rally from holding 0.8950 (1.1174) on Xmas Eve and has seen a steady retreat this morning to test 0.9030 ( 1.1075) as I type. GBPJPY found support at 139.50 in its retreat from 141.00 and now testing 140.20 again on some general GBP demand this morning.
Patience continues to be a virtue and rally-selling in GBPUSD still bringing its reward but entry level key as always. Definitely will continue to see some dip demand too so equally we're seeing a case for buying in the dips still but not my preference. Brexit fallout will continue to be very much be in the mix and COVID will keep casting its sad shadow. Market liquidity is still thin so caution required as ever.
USDJPY has failed above 103.80 again and now retreating to test the 103.25-30 support area as USD gets sold generally.EURJPY duly held 126.00 but now testing 126.50 again after failing at 127.20 providing good two-way business. EURUSD has had a look at 1.2300 last seen in 2018 amid the USD supply after holding 1.2180 but now in retreat a little amid some general EUR supply in the last hour or so. USDCHF capped above 0.8900 again but since held around 0.8820 on the retreat as EURCHF remains steady with the SNB ever watchful and EURUSD off its highs.
AUDUSD has found a base at 0.7560 this time around and enjoyed a decent rally to 0.7660 as USD selling prevails. USDCAD capped at 1.2880 again and fell to test 1.2780 but finding a little support this morning amid variable/USD oil price tones.
Mixed fortunes for my mighty Shrimpers of Southend with a very satisfying win against local rivals Colchester to stretch an undeafeated run but then coming unstuck last night and looking well off the pace. We shall hope it's a blip and keep believing we can pull through.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.28 GMT