Perky Pound but Euro suffering
Tuesday 16 November 2021
A combination of factors have seen further buyers of the Pound in the past 24 hours helped by a tumbling EURGBP after breaking down through key levels amid the general EUR weakness that I've been highlighting here. Throw in some firmer risk GBPJPY demand helped by core pairs finding dip demand at 113.80 and 1.3400 and now some decent UK jobs data to create a heady mix.
At the last BOE MPC meeting they highlighted their focus on the jobs market and so we've seen some knee-jerk buying from the algos this morning following the data release as rate hike speculation grows again. Keep in mind though that the wages data wasn't so strong in the detail and we have UK inflation data out tomorrow to consider in our deliberations too.
It's still a case of "what next" as markets and traders continue to second-guess the central banks with some fragile risk sentiment lurking amid rising COVID cases in Europe and political unease around Ukraine, Taiwan and elsewhere. USD is generally firmer overall but off its tops while equity markets and yields still underpinned overall, as is oil. Gold is higher too still reflecting some risk aversion amid all the general global uncertainty.
GBPUSD: Support came in at 1.3400 again but we capped at the strong 1.3450 sell interest but have now jumped from 1.3420 to 1.3472 post UK jobs/wages data and remains underpinned by firmer GBPJPY and softer EURGBP.
EURGBP: The pivotal 0.8520-25 finally broke after Friday's failure to hold above 0.8550 and has triggered further stop-loss selling through 0.8480-00 to post lows of 0.8436 so far. The move lower comes amid the general EUR weakness given the ECB's dovish stance and rising COVID cases in the mix too with EURUSD breaking down through strong 1.1400-20 support to post lows of 1.1359 so far. Dangerous to bottom-pick at the moment.Godd size option interest down here in the mix too. GBPJPY: 153.20 resistance now broken nand challenging old lines around 153.80 as GBP finds those fresh buyers and USDJPY remains range bound.
I remain a GBP rally seller across the pairs overall as my preferred trading side albeit against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.
EURUSD: Support at 1.1430 and 1.1400 now history amid the general EUR weakness/firmer USD tones and now testing 1.1350-60 after its rapid fall yesterday nd pips gratefully banked along the way. I still expect any bounce to be less than impressive amid rising COVID cases, dovish ECB,and cross-flow action. USDJPY: Underpinned still at 113.75-80 but equally sellers around 114.30 again where we have some large option interest today. EURJPY: 130.50 support now history as is 130.00 but 129.50 providing some support so far. Rally sellers still poised as I've been warning. USDCHF: Support coming in now at 0.9240-50 helped by the generall firmer USD tones and with the SNB ever vigilant and aware that EURCHF is under pressure again but equally sellers still poised. EURCHF: 1.0530 was broken but 1.0500 now holding with the SNB ever vigilant but those sellers in the rallies still prevailing amid the EUR weakness.
AUDUSD: 0.7320 still providing good support amid firmer metals prices and some AUDJPY not to mention a few EURAUD sellers around too. Those rally sellers between 0.7360-80 duly capping moves though so far. USDCAD: 1.2500 now holding after a break lower yesterday. Some CADJPY demand helping to cap at 1.2550-60.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.48 GMT