Perky Pound again on positive poll and better risk sentiment
Thursday 28 November 2019
The much anticipated/hyped YouGov MRP poll was published last night and showed the UK Tory government with a majority of 68. Cue algos in thin liquidity pushing the Pound higher and it remains underpinned this morning as I type but with decent rally-sell interest tempering further gains.
Elsewhere the algos have shrugged off Trump signing the HK Bill and markets are focusing on some positive tones from the US-China trade talk headlines although nothing new or of real substance still. That in turn is producing some better risk-sentiment and hence JPY and CHF supply further adding to the GBP demand but some North Korea missile-launch interest reported this morning may have some tempering impact.
With the US Thanksgiving Day holiday today/tomorrow, along with month-end trading in the same moment, we might reasonably expect some volatility amid the thinner liquidity conditions so be warned, and be careful.
GBPUSD found support at 1.2850 yesterday amid that expiry interest congestion I warned about and has rallied post-poll to 1.2952 but sellers there prevailing for the moment. EURGBP has fallen to test 0.8500 support (GBPEUR resistance 1.1765) but holding so far too. We have over EUR1bln in expiries rolling off tomorrow at 0.8500 and with the usual month-end BUBA demand in play and providing further support.GBPJPY remains underpinned and has now broken out of recent topside resistance on the YouGov poll/risk sentiment double whammy to post 141.87.
I will continue to rally-sell GBP as my preferred strategy overall too amid the ongoing Brexit/Election uncertainty but happy to buy back in the dips as ever. In essence the general uncertainty and can kicking continues and for me that's still Pound negative overall but I respect that others (and the algos) see it differently). Remember we're ranging still so don't get too greedy whatever your bias.
EURUSD remains on the back foot but tightly bound still. Decent bids still around 1.1000 helping to support for the moment with those EUR 2bln in expiries yesterday also providing demand as I warned. USDJPY remains underpinned but equally finding rally sellers now around 109.50 again as the range stays tight.USDCHF remains underpinned too but rallies still tempered the 1.0000 by offers and some EURCHF supply above 1.1000 with the Euro on the back foot overall.
AUDUSD remains on the back foot with that recent option expiry support now out the way but helped a little by some AUDJPY demand. USDCAD continues to trade tightly but underpinned by the general USD demand and those 1.3260 bids.
Have a good day out there one and all.
Interbank rates: 08.13 GMT