Eyes on the Pound as Sunak steps up
Wednesday 3 March 2021
Normally UK Budgets are over-hyped and most of the detail is leaked ahead of the announcement in Parliament. Today is not a lot different in essence nd we've already a good idea of the key points but given the market's sensitivity to all things vaccine-led economic recovery expectations of today's Budget from Fin Min Sunak shortly after 12.30 GMT take on a greater significance. UK Services final PMI just released came with softer revision but not as bad a some feared so we've seen GBP jump a little before running into sellers again.
Elsewhere we've seen some variable risk sentiment but JPY and CHF funding-ccy supply still notable as equities remain underpinned. Yesterday's 4PM London fix saw some good GBP and EUR demand so we'll keep an eye on that again today.As always we need to focus on price action and value for money in our FX entry and exit levels. Discipline and patience needed more than ever in these ever fickle/fragile times.
GBPUSD found support this time into decent lines at 1.3850 having finally broken down through 1.3880-00 but then staged a decent rally to 1.4005 this morning amid better risk flows too. EURGBP found support at 0.8630-35 helped by those options rolling off but equally duly found rally sellers into 0.8670 again. More decent size option interest today at 0.8650 and 0.8600 should help support.GBPJPY has now found a base at the previous 148.80-00 cap amid the better risk tones and testing 149.50 as I type with JPY supply still notable and USDJPY holding 106.60-70.
I remain poised to sell GBP into rallies as a jobbing preference but respecting dip demand still with price action ever fickle. Equally a case still for going long in the dips therefore as we continue to range but I still feel the recent rally somewhat over-cooked. Patience and not getting greedy remain key.
USDJPY has found dip demand at 106.60-70 again amid some further JPY supply on the crosses but equally capping at 107.00 still.EURJPY found a base at 128.80 this time after capping there before and now testing 129.30 bids as I type.
EURUSD found support at 1.2025 after holding 1.1990 and now up through 1.2100 amid better risk and cross pair demand. Reports just out that the ECB sees no need for drastic action to curb bond yieldS. USDCHF failed at 0.9200 as EURUSD rallied but retreat supported by EURCHF being underpinned still and now up through 1.1060 with the SNB ever-watchful/giving a helping hand.
AUDUSD found support at 0.7750 amid the better risk tones/AUDJPY demand and has made steadty progress higher to test 0.7840. USDCAD retreated from 1.2700 to 1.2600 again amid softer USD/firmer oil tones but since bounced back before failing at 1.2650.
A disappointing night for my mighty Shrimpers at Cheltenham as we gave away a needless penalty and misssed two good chances in losing 1-0 having once again shown good resolve. We'll keep believing though.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.33 GMT