Perky Pound as Greenback stays on the back foot.
Wednesday 4 December 2019
We've now seen the Pound make gains across the board amid the ongoing US Dollar retreat as investors continue to back a Tory majority in next week's General Election. After the Euro had a decent start to the week it now seems it's the turn of GBP pairs to make some progress helped by some risk-on GBPJPY demand this morning but rally sellers remain poised.
GBPUSD has now broken up through the 1.3030 offers/resistance after holding 1.2975-80 where I warned of bids building yesterday in a tweet after the initial failures above 1.3000. The pair has been helped this morning by some positive tones on US-China trade talks but more hot air without real substance. EURGBP has broken down through 0.8500 to test 0.8480 bids/support (GBPUSD up to 1.1789) as GBPUSD rallies. GBPJPY remains tightly bound but underpinned above 141.00 still despite a dip to test 140.80.UK Services PMI this morning came in better than the flash estimate but still below the 50 growth level and pointing to a quarterly 0.1% decline in UK GDP. GBP pairs mostly unchanged after accordingly.
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 some others (and the algos) see it differently). Remember we're ranging still so don't get too greedy whatever your bias. My USDJPY shorts provide a nice hedge as ever.
EURUSD has levelled out having failed to break up through 1.1100 but similarly holding 1.1050 for the moment while USDJPY has continued its grind lower to post 108.42 and my rally shorts continue to hedge some GBPUSD shorts but we've seen an uptick to look at 108.80 this morning amid that US-China headline. USDCHF also remains on the back foot and has now tested 0.9850 support amid that ongoing EURCHF supply above 1.1000 that I've been highlighting. The SNB will remain ever vigilant though.
AUDUSD has found itself in retreat again after some soft GDP data but some decent support at 0.6800 holding the falls so far.USDCAD continues to trade tightly with the general USD supply capping at 1.3320 but tempered by softer oil prices still and 1.3260 support.
Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.
Interbank rates: 08.45 GMT