Pound under pressure once again
Friday 16 September 2022
RIP Queen Elizabeth II
Long live the King
FX pairs continue to be tightly bound overall but the one standout is GBP as the Pound comes under attack once more. Dovish data this week including horrible retail sales this morning suggests the MPC will not be hawkish next week (were they ever going to be?) plus the current disriptions to the economy due to our national period of mourning for our late Queen not helping either sadly. GBPUSD has fallen to 1.1350 in a rush this morning as EURGBP climbs up through 0.8750 and GBPJPY falls through 163.00 per my tweets. Soggy picture overall still but some consolidation expected given the speed of move so far.
Equity markets still treading water ahead of next week's US Federal Reserve FOMC announcement. Gold has taken another fall, this time through $1680 to test $1650 and Oil also heading lower again. US retail sales and NY Empire State Manufacturing Index yesterday produced mixed tones but should keep Powell & Co in hawkish mode. Ukraine/Russia war still a very large elephant in the room. Public Holiday here on Monday for Her Majety's funeral.
GBPUSD: Capped into 1.1500 yesterda then 1.1450 in Asia and now down testing 1.1350 as stops triggered through the strong 1.1400 support after the soggy data. Patience a virtue still but I prefer the rally-sell side and ever-poised. Some consolidation expected due to speed of move but bearish overall still. Option contracts in play. EURGBP: Yesterday's solid break of 0.8680 then 0.8700 provided the platform for the 0.8760 rally this morning amid the GBP supply. Dip demand expected for the moment as BOE casts a shadow. GBPJPY: Capping at 164.50 then 164.00 to post 162.85 so far amid softer GBP/softer risk double whammy.
EURUSD: Finding decent support around 0.9950 still after failing again above 1.0000. Rally sellers including me still poised.USDJPY: Finding support into 142.80 again after failing at 143.70 as we continue to range amid the mixed risk tones and FOMC next week. Expecting more 2-way business. EURJPY: Support still around 142.50 in the retreats after capping at 143.50 as we range tightly still. Expect some two-way business again.USDCHF: Holding 0.9615-20 again in Asia after yesterday's extended retreat into 0.9560 but capping at 0.9650 so far as EURUSD and EURCHF both range. Some natural CHF demand still but SNB still keeping an eye on matters.EURCHF: Holding 0.9580 again after the extended retreat to 0.9540 but struggling into 0.9640 this time helped by some general CHF demand but SNB seemingly smoothing downstairs.
AUDUSD: Broke down through 0.6730 and now capping there in Asia amid some firmer USD tones and softer risk AUDJPY supply. GBPAUD finding 1.7000 area a base now with sellers capping at 1.7100 again as GBP retreats generally. NZD falling through 0.6975 support and posting 0.6940 amid the firmer USD/softer risk tones. GBPNZD capping at 1.9250 amid the softer GBP tones but holding 1.9080 for the moment.USDCAD: Decent rally to 1.3280 as I type amid the firmer USD/softer oil double whammy.
Let's continue to be careful out there and have a good weekend..
Interbank rates: 08.53 BST