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  • Writer's pictureMike Paterson

Perky Pound amid variable risk tones

Tuesday 21 July 2020

The extended EU Summit finally reached an agreement on the Recovery Fund for the full EUR 750bln

but not without some compromise and that's been enough to see the buy rumour/sell fact reaction for the Euro that I warned about yesterday.

Meanwhile we have all the usual COVID, US-China concerns so it remains a fragile scenario out there but with markets generally in glass-half-full mode still but yesterday saw some concerted GBP demand with talk circulating of a large buyer investing in UK equity markets as I noted in a tweet so I hope you took heed and sellers stayed patient.

GBPUSD has been up to 1.2717 this morning helped by supply from the EURGBP retreat down to 0.9009 but since looks underpinned around 1.2650 for the moment. EURGBP broke down through the 0.9100 support on the stronger GBP/capping Euro double whammy and fell steadIly to test 0.9000 before rallying a little. I remain a dip buyer overall but respecting the current supply. Never a good idea to stsnd in the way of natural flow.GBPJPY found a good base at 134.80 and has been up to 136.40 amid the firmer GBP/risk combo and remains underpinned.

I stay poised to sell GBP rallies overall as my preferred side and buy back in the dips as ever but patience continues to be a virtue and entry level key as always. I still expect to continue seeing some dip demand but cross-flows, risk sentiment and Brexit will continue to see a mixed bag as we've been witnessing.

USDJPY continues to range 107.00-50 amid the variable risk/USD tones and large option expiry interest while EURJPY has found support around 122.30 now and rallied on the EU Summmit hopes but failing at 123.00 again on the buy rumour/sell fact outcome. EURUSD found support into 1.1400 again and since rallied to test the 1.1460-70 area again but dipping as I type as cross flows continue to contain. USDCHF failed around 0.9410 this time but supported now into 0.9370 as EURUSD retreats and with an underpinned EURCHF still with the SNB ever vigilant in the dips.

AUDUSD has finally broken up through and stayed above 0.7000 to now post fresh recvewnt highs of 0.7058 amid the firmer risk tones after finding support into 0.6980.USDCAD has capped into 1.3600 again and seen a steady retreat to now break down through 1.3500 as I type amid the softer USD/firmer oil price combo.

Markets are ever-fickle but good two-way pips to be had so do contact me if there's areas of trading these markets or how to make best use of the order boards and expiries, that you might need some further help with.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates:  09.15 BST

GBPUSD   1.2686

EURUSD   1.1431

EURGBP   0.9012

GBPEUR   1.1094

GBPAUD   1.7988

GBPCAD   1.7128

GBPJPY   136.09

GBPZAR   20.9854

GBPHKD   9.8355

USDJPY   107.27

USDZAR   16.5416

EURJPY   122.65

EURCHF   1.0737

EURHKD   8.8657

AUDUSD   0.7052

USDCAD   1.3503

USDCHF   0.9392

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