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  • Mike Paterson

Perky Pound but jury still out as another week gets underway

Monday 12 October 2020

Retreats in the Pound have been rather imited lately and after I closed my desk and signed off on Friday we saw a key break in GBPUSD on the better risk tones as Trump said he was keen for more stimulus. The jury is still out on that one though as it becomes part of the electioneering tactics from both sides.


Since Friday's rally the pair has tested 1.3060 and held the 1.3020 pivot area helping to underpin GBP generally but Brexit trade deal tones still remain the elephant in the room. As ever though, we must respect market sentiment/moves even if we don't agree. Toda PM Johnson will announce tougher lockdown measures across the UK.


Elsewhere the PBOC made it cheaper to sell Yuan in an announcement over the weekend and set the mid-rate significantly higher and that's weakened CNH but also capped some commodity currencies helped by some general USD demand so far in Asia and early Europe.


Central Bank speakers today include ECB's Lagarde and de Quindos at 11.00/15.00 GMT and BOE's Bailey at 16.00 GMT. Columbus Day holiday in the US and cash markets will be closed.


GBPUSD currently making its mind up at 1.3035 so let's see what transpires today. Current demand needs to be respected but FX markets remain fickle as ever.EURGBP capped at 0.9125-30 again on Friday but equally finding support at 0.9050 still as GBPUSD treads water.GBPJPY remains underpinned on the better risk play and has now found a decent support line at 137.40 but failing above 137.80.


I stay poised to sell GBP rallies as my preferred side and buy back in the dips as ever.  Patience continues to be a virtue and entry level key as always. I still see dip demand though with markets and risk sentiment still in a state of uncertainty overall.Brexit remains the very big elephant in the room.


USDJPY failed at 106.00 again on Friday where we have another 2.3bln option expiries today and some re-sells duly made with buy backs made into 105.50 as still not expecting a collapse any time soon.EURJPY has failed above 125.00 as core pairs find rally sellers but support now into 124.50. EURUSD still underpinned around 1.1780-00 but rally sellers also remain poised, now above 1.1830. USDCHF failed at 0.9140 (helped ny those 0.9150 expiries) as EURUSD rallied but holding 0.9100 with EURCHF steady and SNB casting its shadow still.


AUDUSD has capped at 0.7250 and gapped lower in early Asia on the PBOC news but holding 0.7210 so far ahead of some large options rolling off at 0.7200. USDCAD failed above 1.3180 this time where I mentioned on Friday that offers were building but holding 1.3100-10 amid the firmer USD tones.


Markets are ever-fickle so don't forget to contact me if there's areas 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:  08.46 BST

GBPUSD   1.3030

EURUSD   1.11817

EURGBP   0.9070

GBPEUR   1.1024

GBPAUD   1.8020

GBPCAD   1.7094

GBPJPY   137.49

GBPZAR   21.4930

GBPHKD   10.1022

USDJPY   105.54

USDZAR   16.5165

EURJPY   124.73

EURCHF   1.0764

EURHKD   9.1638

AUDUSD   0.7229

USDCAD   1.3123

USDCHF   0.9109


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