Pound underpinned by Conservative victory but FX jury still out
Friday 13 December 2019
It was always going to be a night of unknowns but we know now that the Conservative Party have a large working majority for the first time in many years. Does that make Brexit on 31 January a definite? It may do (still not certain) but that's not the end of the process, merely the start. Since my last update we've seen the Pound retreat a little further but remains underpinned for the moment as we wait to see how much of this result has been factored in.
Elsewhere Trump has been making positive noises on the US-China trade talks (China hasn't though) while still embroiled in impeachment proceedings in what has been a quite remarkable year around the globe.
GBPUSD has fallen through 1.3400 as I type but will continues to be underpinned with gaps to be filled after last night's sharp spike. Those large expiries later today at 1.3250(1.4bln), 1.3295-00 (1bln) 1.3400(1.2bln)and 1.3450(Gbp1.25bln) are potentially all in play too. EURGBP is rallying as GBPUSD falls and now posting 0.8350 (GBPEUR down to 1.2000 from those 1.2088 highs). GBPJPY has fallen back through 147.00 after the 148.01 highs.
I continue to have concerns as to how all this plays out for the UK, both economically and politically, and I stay poised sell GBP rallies while respecting the current relief demand still. I repeat that this is the end of nothing but the start of fresh unknowns.
EURUSD has tested 1.1200 helped by some EURJPY demand tempering the EURGBP sell-off but currently back down at 1.1170. More expiry interest in play today at 1.1120-25(EUR 1.3bln) and 1.1150-70(1.9bln) to help contain the range. USDJPY has been up to 109.66 as risk sentiment remains slightly positive. USDCHF has fallen back again though to post 0.9804 as EURUSD rallies and remains underpinned with EURCHF finding sellers above 1.1000.
AUDUSD has made more gains in the last the 24 hours amid AUDJPY demand on the better risk sentiment and A$1.3bln in expiries today between 0.6885-00 all having a say. USDCAD has retreated again from 1.3200 but holding at 1.3150.
Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.
Tomorrow sees the soggy Shrimpers back at the hallowed Hall and after this week's Election/FX market fun and games I'll gladly take whatever they throw at me!
Have a good day/weekend out there one and all.
Interbank rates: 08.30 GMT