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  • Writer's pictureMike Paterson

Pound in rapid retreat still

Wednesday 9 September 2020

A combination of the EU Brexit trade talks debacle and rising COVID concerns plus a general wobble in risk sentiment continue to weigh heavily on the Pound as I have long warned.

UK PM Johnson today will unveil his adjustments to the Withdrawal Bill which in themselves provide huge controversty and techincally a breach of international law. Expect a statement in Parliament this afternoon, probably after PMQs finish around 11.30-45 GMT and there is also a presser planned for 15.00 GMT.

Risk sentiment still fragile as stocks and oil reverse recent gains and now with added concern on AstraZeneca having to pause its COVID vaccine trials.

GBPUSD broke down through 1.3080 support triggering further losses that has seen strong 1.3000 bids exhausted in NY and now posting lows this morning OF 1.2920 which once again has justified my bearish GBP view. Rallies should be limited for the moment in the overall scenario but equally we have fallen quickly from the (overdone imho) highs into 1.3500 so some caution advised.

EURGBP remains underpinned as I have been warning and has broken up through good resistance at 0.9060 to post highs now of 0.9107 thids morning as GBPUSD outstrips EURUSD in this latest retreat. Dip buying remains my preferred strategy overall but caution still needed ahead of the latest ECB policy announcement/presser tomorrow.

GBPJPY has continued its journey south after breaking down through 138.80-00 to post lows of 136.75 this morning, with hedge funds using the pair as a risk trade as ever, before bouncing a little as I type.

I stay poised to sell GBP rallies overall 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 expect to continue seeing dip demand though should we retreat further.

USDJPY has broken down through 106.00 amid the softer risk tones but finding support at the next line of 105.80 while EURJPY has capped at 125.60 amid the soft risk tones but since finding support around 124.50 with some decent bids on core pairs. EURUSD finally gave up on that 1.1770-80 support but since found more into 1.1750. Rally sellers remain poised though still.USDCHF has found a cap at 0.9200 amid the softer risk as EURCHF also retreats but equally found support at 0.9150.

AUDUSD continued its retreat to test 0.7200 helped by the spy spat with China and risk-off AUDJPY selling but rallying a little as I type. USDCAD has broken up through 1.3150 to test 1.3260 resistance now amid the softer risk/oil plays and CADJPY supply.

Markets are ever-fickle so don't forget to contact me if there's areas of these markets that you might need some further help/guidance with.

I wish you good trading and let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates:  07.55 BST

GBPUSD   1.2922

EURUSD   1.1762

EURGBP   0.9101

GBPEUR   1.0986

GBPAUD   1.7921

GBPCAD   1.7127

GBPJPY   136.75

GBPZAR   21.8005

GBPHKD   10.0207

USDJPY   105.83

USDZAR   16.8278

EURJPY   124.48

EURCHF   1.0807

EURHKD   9.1214

AUDUSD   0.7211

USDCAD   1.3256

USDCHF   0.9188

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