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Pound falls again as May loses Commons votes

Wednesday 5 December 2018

It was always going to be a lively 24 hours for all things Brexit and yesterday evening May & Co lost three votes in the House of Commons, not least of which was being found guilty of contempt of parliament in failing to produce the full Brexit legal advice. Cue further falls in the Pound with more fun and games to come today

From highs yesterday morning of 1.2839 GBPUSD has been down to 1.2659,levels not seen since June last year but has since been back up to 1.2729 as traders remain a little cautious on what it all means moving forward. Is this all leading to a No Deal Brexit (GBP negative initially at least) or No Brexit at all (GBP positive but amid political turmoil).Today the full Brexit legal advice will be published at 11.30 GMT and the Commons will continue to debate May's "deal" every day this week ahead of next Tuesday's key vote. UK services PMI data at 09.30 GMT will be keenly awaited given the sector's 80+% contribution to GDP. Algos will feed off anything unexpected before attention returns to all things Brexit.

Immediate offers/sellers between 1.2720-30 are currently being tested then more lined up at 1.2750,1.2780 and 1.2800 with further interest at 1.2820 then 1.2850 still. Bids/demand now into 1.2700 and 1.2680 then 1.2650,1.2630 and 1.2600 still.I remain GBP bearish overall and happy to jump on rallies then buy back in the dips while remaining core short, a strategy that continues to work well.

EURGBP remains underpinned and has rallied again to post 0.8942 (GBPEUR down to 1.1183) before falling back (again)to 0.8905 as I type. Buy interest at 0.8900, 0.8880, 0.8850 with sellers now at 0.8920, 0.8935 then 0.8950 still.

EURUSD failed into the 1.1420 offers I've been highlighting and fell to lows of 1.1320 amid some general US$ demand.Immediate demand/support now around 1.1320 still then 1.1300 and 1.1280 with sellers poised into 1.1360 then 1.1380 and 1.1400.

USDJPY fell further to test the support at 112.50 I highlighted yesterday before the return of some US$ buying saw it back up to 113.12 this morning before capping. Bids now at 112.80, 112.65 and still building around 112.50 then 112.30 and 112.00 with sellers between 113.20-30 and 113.50. I remain a rally seller buying back in the dips with decent 2-way business to be had.

USDCHF has also rallied to test 1.0000 before capping with EURCHF underpinned but also capped still around 1.1350. Sellers remain poised on both though even if the SNB will still look to "smooth" the declines.Bids/support still at 1.1300 and 1.1280 with USDCHF demand building between 0.9960 then 0.9920-30. Sellers poised at 1.1350-60 still and 1.1380 with USDCHF supply at 1.0000 and 1.0020. I'm happy to trade both sides of the price action at the moment in these tight ranges.

AUDUSD found itself stuck around 0.7370 helped by large option expiry interest but has since tumbled to post 0.7282 helped by weak Aussie data.Decent bids now still at 0.7280 with larger interest at 0.7250 helped by large option interest rolling off on Friday. Sellers now between 0.7320-30 and 0.7350.USDCAD has rallied strongly on a firmer US$/softer oil price double whammy with buyers now building at 1.3250 then 1.3230 and 1.3200 with sellers poised at 1.3300, 1.3320 and 1.3350.

Fickle Forex markets ever prevailing so get your orders in to take full advantage of these moves. Volatility is likely with US markets are closed today in respect of former-President Bush Senior's state funeral.

Have a good day one and all.

Twitter: @MSPFX and @MikePatersonFX

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