Pound rallies on warmer Brexit tones from EU
Thursday 30 August 2018
Yesterday saw a solid rally in the Pound after comments from EU's Barnier and Germany saying that special concessions could be made toward the UK for a Brexit deal to be made. Although the talk was later diluted it hasn't stopped the algos and GBP bulls from taking full advantage.
GBPUSD was trawling around 1.2875 when the comments broke with focus on UK Brexit chief Raab's testimony to a House of Lords Select Committee. Traders were definitely caught on the wrong foot with algos driving the pair higher and triggering stop losses to finally test 1.3050 with GBPJPY buying also a key feature and exacerbating the move. We've retreated to 1.3000 this morning amid some general USD demand returning. Immediate support/buying interest now around 1.2980 then more into 1.2950 and 1.2930 which becomes pivotal area.Sellers building around 1.3030 again then still at 1.3050,1.3085 and 1.3100.Good two-way business to be had but I prefer to sell the rallies still. The devil is in the detail still and any Brexit deal is still a long way from being sorted.
EURGBP found little support from the usual month-end demand with traders, and indeed the Bundesbank, happy to wait to see the extent of the fall out. We've been down to 0.892 (GBPUSD up to 1.1147) before finally finding some support. Sellers now around 0.9000 then 0.9030 and 0.9050. Buying interest between 0.8950-60 then more into 0.8930 and 0.8900 still.Dip demand still expected through month-end but sellers remain poised too with that barrier option at 0.9100 casting a shadow too.
EURUSD rallied to post 1.1720 but capped by some general Euro supply to retreat to 1.1678 as I type.Buying interest between 1.1650-60 still then more into 1.1625-30 and 1.1600. Some sellers now around 1.1700 again and 1.1730 still with more into 1.1760. Large option contract interest rolling off tomorrow between 1.1700-20 should help contain the range.
USDJPY held the support lines around 111.00 and with the impetus of that GBPJPY buying we've seen some Yen selling across the board to help post 111.76.Sellers still poised at 111.80 and 112.00. Buyers lining up into 111.30 with more at 111.00 and 110.80 still. USDCHF has been on the back foot down to 0.9685 with CHF demand versus the Yen and EURO giving it another shove. Dip demand still expected but those CHF buyers remain poised as I've been warning.
AUDUSD gave up on its defence of 0.7300 to post 0.7275 but has been back above 0.7300 again only to fall once more. Immediate buying interest building around 0.7270 and more into 0.7250. Sell interest at 0.7320 then between 0.7350-60. USDCAD held 1.2900 but has failed to maintain gains above 1.2950 with hopes of positive NAFTA news by tomorrow so the jury is still out. Buyers still around 1.2900 then 1.2870-75. Sellers around 1.2950 then the pivotal 1.2980-1.3000 area.
Fickle markets still prevailing, and month-end volatility, so get your orders in to take full advantage of these moves.
Have a good day out there one and all.
Interbank Rate 09.12 BST GBPUSD 1.3019 EURUSD 1.1689 EURGBP 0.8977 GBPEUR 1.1137 USDJPY 111.66 USDCAD 1.2931 USDCHF 0.9693 GBPAUD 1.7870 GBPCAD 1.6825 GBPCHF 1.2614 GBPZAR 18.9812 GBPHKD 10.0928 EURHKD 9.0625