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  • Writer's pictureMike Paterson

Pound on a roller coaster ride amid variable risk sentiment

Friday 12 June 2020

Yesterday saw some further retreat in the Pound and risk-off sentiment prevailing and I hope my steer has helped over the past few sessions but we've seen some reversal in both as European trading gets underway.

News out that the UK will today formally confirm no Brexit extension added to the Pound's woes but that wasn't so new and it was also announced that Johnson and Von der Leyen are planning to hold talks on 15 June which slightly tempered the impact as hopes of a compromise increased. I warned yesterday "these are ever-fickle markets so we will take nothing for granted" and so it has proved with awful UK GDP earlier also not a surprise but some risk appetite returning generally to see GBP pairs on the rise once more.

GBPUSD traded lower yesterday to test 1.2550 but too much too fast in these markets and now posting 1.2620 as I type helped by the risk-on GBPJPY demand as USDJPY holds 107.00 and looks to test 107.30 again. EURGBP has failed above 0.9000 again (GBPEUR support at 1.1100) on the GBP recovery this morning and now testing support at 0.8960 (GBPEUR up to 1.1160).GBPJPY fell to 133.80 on yesterday's soggy risk appetite but with core pairs both finding dip demand and better risk we're testing 135.30 as I type in the latest rollercoaster risk ride.

I stay poised to sell GBP rallies overall as ever but patience continues to be a virtue and entry level key as always. I still expect to see some dip demand though given the recent rallies.

USDJPY fell to test 106.50-60 support after holding 106.80 for a while but we're back up to 107.30 on the renewed risk-on Yen selling.EURJPY tested 120.25 on the risk-off plays yesterday but similarly back up to 121.40 as I type on the better risk today.EURUSD failed above 1.1400 again and been down to test that 1.1280 pivot amid some strong cross pair flows and variable risk with 1.1320 now broken on the bounce.  USDCHF held 0.9380 and now back up testing 0.9450 as EURCHF also bounces with EURUSD holding 1.1280 too. SNB no donut still in the frame and deciding enough is enough for the time being methinks.

AUDUSD has had another rollercoaster ride of its own with a test of 0.6800 yesterday amid the softer risk and shadow cast by China but now back up testing 0.6900 helped by the latest risk-on AUDJPY demand. USDCAD based around 1.3460 and seen a steady rally to 1.3660 amid the softer oil/risk sentiment combo but since retreating to 1.3550 as we see some CADJPY demand return.

Let's continue to be careful out there in all things. Staying safe must be our main priority still. Make sure you get some rest over the week-end.

Interbank rates:  08.30 BST

GBPUSD   1.2595

EURUSD   1.1309

EURGBP   0.8980

GBPEUR   1.1133

GBPAUD   1.8309

GBPCAD   1.7111

GBPJPY   134.98

GBPZAR   21.4978

GBPHKD   9.7688

USDJPY   107.18

USDZAR   17.0207

EURJPY   121.19

EURCHF   1.0694

EURHKD   8.7746

AUDUSD   0.6875

USDCAD   1.3588

USDCHF   0.9457

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