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  • Writer's pictureMike Paterson

Pound rallies strongly on positive Brexit talks

Friday 11 October 2019

Yes folks, the roller coaster Brexit ride continues with yesterday seeing the Pound sharply higher on surprisingly positive tones to the Varadkar/Johnson talks. The devil as always is in the detail and this story is by no means over but for the moment there appears to be a level of optimism not seen in recent weeks. Certainly good enough for the algos to go into overdrive helped by a few stop- losses along the way. Today we wait on the outcome of talks between Barclay and Barnier now underway to see whether yesterday's initiatives have any legs.

Elsewhere the US-China trade talks also show renewed hope of a deal being struck and we've seen some decent risk-on sentiment plays but once again we wait to see the detail. Turkey's foray into Kurdish territory rightly continues to grab headlines too just in case anyone thinks all is well with the world.

GBPUSD was happily muddling around between 1.2230-80 then rallied to take out the pivotal 1.2330 I've been mentioning triggering stops and testing 1.2380. Cue more positive words from Varadkar and we saw the same rally/stop-loss pattern to post 1.2469 before stopping ahead of the large 1.2480-00 sell interest that I tweeted about.EURGBP has naturally fallen on the GBP demand and as EURUSD finds sellers around 1.1030  and we've now been down to test old support at 0.8830 (GBPEUR up to 1.1361) which we continue to hold as I type. GBPJPY has rallied strongly to 135.00 on the stronger Pound/risk sentiment combo also triggering a few stops along the way but sellers remain poised in these fickle times.

I will continue to rally-sell GBP as my preferred strategy overall too amid the ongoing uncertainty/indecision including Brexit/political fallout but happy to buy back in the dips as always.

It may sound like I'm being stubborn and yesterday's moves once again showed the merit of my advice to not get greedy and identify support as well as resistance levels. I have also been warning to be cautious lately with 1.2200 proving an ever bigger line in the sand for GBPUSD.Still no reason to change my view any time soon overall ( we've had many moments of optimism only to be deflated huh?) but yes the current optimism has to be respected as the madness plays out.

EURUSD remains underpinned helped by some risk-on EURJPY demand but we've failed around the 1.1030 offers only to hold 1.1000 on the retreat with large option expiry interest in play again.USDJPY has enjoyed the risk-on sentiment to post 108.13 before running out of puff.USDCHF continues to find dip demand helped by risk-on plays and with EURCHF underpinned too as EURUSD finds support around 1.1000.

AUDUSD has enjoyed the risk-on ride higher with AUDJPY demand helping to push through 0.6780 now and testing 0.6800. NZD traders should be aware of decent size option expiries at 0.6300 today. I prefer the rally sell strategy still overall on AUD while respecting current demand.

USDCAD has broken down through 1.3280 helped by CADJPY demand but holding around 1.3270 as I type.

Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.

Tomorrow the soggy Shrimpers return to the hallowed Hall still without a Manager and with the rumour mill in full cry. We'll hope for a turn around but realistically these are still sorry times for the Club.

Bigger issues in the world right now though eh?

Have a good day/weekend out there one and all.

Interbank Rate 08.12 BST

GBPUSD   1.2453

EURGBP   0.8845

EURUSD   1.1019

GBPEUR   1.1303

GBPAUD   1.8357

GBPCAD   1.6532

GBPJPY   134.51

GBPZAR   18.6670

GBPHKD   9.6564

USDJPY   107.95

USDZAR   14.9455

EURJPY   118.95

EURCHF   1.0980

EURHKD   8.5432

AUDUSD   0.6787

USDCAD   1.3270

USDCHF   0.9965

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