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  • Writer's pictureMike Paterson

Pound rallies as Brexit talks continue

Monday 14 December 2020

The GBP roller coaster ride continues at pace and there were definitely shouts of "Mind the gap" last night in Asia as the Pound opened up higher after Brexit talks were declared still very much open.

No great surprises there to be honest as I've warned before so I hope you took full advantage with some wish-list entry/exit levels as per my closing Tweet. Some good two-way business since but GBP still underpinned for the moment

COVID is still casting its sad shadow, especially in the US, and markets are still second-guessing the fall out to come and the US stimulus package unknowns.Variable risk sentiment continues with equities and oil higher but iron ore prices lower after state intervention from China.

GBPUSD gapped up at 1.3360 in Asia from 1.3230 on Friday's close before nudging higher then dropping back below 1.3300 and holding the pivotal 1.3280. Further gains through 1.3400 this morning amid the market's happy-clappy optimism.EURGBP opened in Asia at 0.9090 from 0.9150 before capping at 0.9120 and now testing 0.9050 as I type. GBPJPY is finding good support on the firmer GBP/risk double-whammy and now holding above 139.00 after gapping from 137.60.

I stay poised to sell GBP rallies as my preferred side and buy back in the dips as ever.Patience continues to be a virtue and rally-selling in GBPUSD is still bringing reward but entry level key as always. Definitely still expecting some dip demand amid all the volatility as I've warned for a while now. Brexit still the large elephant in the room.

USDJPY failed into 104.20 and then 104.00 and testing 103.75-80 again as I type and pips gratefully banked on re-sells. I remain a rally seller overall but still respecting option/sentiment flows.EURJPY remains tightly bound between 125.80-126.30 amid variable sentiment and cross flows on both core pairs. EURUSD opened higher in Asia amid some general USD supply and still underpinned as the European session gets fully underway. I prefer to sell rallies still but respecting the current dip demand too. A reminder that we have large EUR Calls at 1.2000 this week to keep in mind as well.USDCHF remains on the back foot after failing above 0.8900 again once more and now clinging on to 0.8850 again as EURUSD rallies but with the SNB still ever watchful.

AUDUSD remains underpinned but had a wobble in Asia on the Chinese iron ore intervention but since made steady gains amid general USD supply/firmer risk to test 0.7580 after holding 0.7525. USDCAD failed into 1.2800 amid the softer USD/firmer oil price combo and been down to test 1.2740 this morning after capping at 1.2760.

Markets are ever-fickle so don't forget to contact me 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. Have a good week one and all.

Interbank rates: 08.36 GMT

GBPUSD 1.3390

EURUSD 1.2143

EURGBP 0.9060

GBPEUR 1.1032

GBPAUD 1.7713

GBPCAD 1.7079

GBPJPY 139.17

GBPZAR 20.1478

GBPHKD 10.3890

USDJPY 103.86

USDZAR 15.0005

EURJPY 126.14

EURCHF 1.0776

EURHKD 9.4172

AUDUSD 0.7564

USDCAD 1.2747

USDCHF 0.8873

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