Pound finding favour but jury out still
Wednesday 11 November 2020 We will/must never forget.....
In the aftermath of Monday's news from Pfizer we've seen strong gains for the Pound as markets and traders feel the UK has a lot more to benefit from the early release of a vaccine. As a service sector-led economy we were always going to suffer greater from COVID lockdowns as I mentioned here so it only follows that we should see a relief-rally on this latest good news.
Is the move overdone/fully justified? It matters not from a trading perspective. The forex market is what it is and we must respect the flows always.
A busy start to the day and I was getting to the end of this update when GBP started kicking off on latest Brexit source headlines about no agreement being made on trade talks this week. No great surprises but the algos did their job and we've seen a quick spike then even greater retreat for GBP pairs.
Equity markets and oil price are still rising and giving risk-on sentiment trades a boost too with safe haven currencies sold along with Gold again. Some good two-way FX business to be had still overall though.
GBPUSD has now posted new recent highs of 1.3314 after 1.3220 and then 1.3250 held yesterday and the latest rally once again given a further lift as EURGBP falls once again through 0.8900 but we;ve been back down to 1.3240 since those Brexit headlines.EURGBP has had a real roller coaster ride. Yesterday I mentioned on Twitter the importance of EURGBP capping at 0.8940-50 in its recovery from 0.8884 if we were to resume the downtrend and that indeed was the clue. Down we went again from 0.8940 then 0.8920 also capping to now test the strong support/bids at 0.8865 but since I started writing this has been back up to 0.8905.GBPJPY has rallied strongly again to post 140.35 on the better risk/firmer GBP double whammy but now lower again at 139.70.
I stay poised to sell GBP rallies as my preferred side and buy back in the dips as ever but I have to respect the current demand. Patience continues to be a virtue and rally-selling in GBPUSD is still bringing some reward but entry level key as always. Definitely expecting dip demand still as I've said for a while now amid the current USD supply.Brexit remains in the room and the negative impact of COVID on the UK economy still in the mix.
USDJPY failed at 105.50 with large options in play yesterday but equally has held 105.00 and since posted 105.54. EURJPY still struggling a little mid some general EUR supply but held 124.00 again after capping at 124.65.EURUSD looking soggy still, as I also highlighted yesterday, but still got 1.1775-80 bids/support having capped at 1.1830 as we continue to range tightly. USDCHF also rallied again on the CHF supply/EURUSD retreat and has now found a good base at 0.9140 with EURCHF underpinned with the SNB still ever watchful.
AUDUSD rallied strongly from 0.7260 helped by the AUDJPY demand but failed into 0.7320 this time before finding support at 0.7280. USDCAD has found support below 1.3000 and since rallied to test 1.3060 on the firmer USD tones but capped by oil price rally too.
Markets are ever-fickle so don't forget to reach out 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: 08.47 GMT