Perky Pound but sellers still poised
Tuesday 28 February 2023
The Pound felt a little bit of love yesterday making the most of some USD supply returning and positive tones from the Northern Ireland protocol talks between UK PM Sunak and EU's von der Leyen following months of stand-off since Brexit. The latest agreement has still to be fully endorsed by the DUP and Parliament so not over the line just yet. BOE's Cunliffe, Pill and Mann all speaking this morning to throw in the mix too.
Per my recent updates month-end flow signals are pointing to USD demand overall but on yesterday's showing we might reasonably assume a lot of it is done but with the Greenback still underpinned keep an eye on the 4pm London fix again. Aussie Retail Sales data came in stronger than expected and gave AUD a lift but re-tracing since.ECB's Lane was out earlier trawling the 50bps Ate hike next time and possibly beyond mantra
Equities enjoyed a decent rally yesterday amid some better risk tones generally and some USD supply but heading south again as I type this morning while WTI is currently seeing a decent bounce to $76.30 after holding $75.00 yesterday then $75.50 in Asia helped by encouraging demand evidence out of China. Gold found itself capping at the pivotal $1820 level but tightly bound still holding $1810 for the moment amid the global uncertainty. Ukraine/Russia war continues to be the main ge-political elephant in the room.
GBPUSD: A decent hold of 1.1975-80 yesterday and a decent rally per my opening paragraph but capping at 1.2070 amid some general USD demand returning but 1.2020-30 now providing a support line after breaking up through. EURGBP: Tightly bound still and holding the old 0.8780-85 support in yesterday's GBP rally and now rising again through 0.8810 as I type. Expect some more two-way trading as core pairs fluctuate. GBPJPY: A support line now forming at 164.00 amid firmer risk and GBP tones after the hold of 163.50 yesterday. Sellers will remain poised though as the uncertainty continues bu underpinned for the moment.
EURUSD: Holding 1.0580 in the latest retreat after a good hold of 1.0550 yesterday as some USD supply returned but with sellers capping at 1.0620 again.Currently back up through 1.610. USDJPY: Capping around 136.85 so far in the latest rallies but equally still holding 136.00-20 in the dips amid the general USD demand and firmer risk tones.
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Interbank rates: 07.22 GMT