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  • Writer's pictureMike Paterson

Round and round we go again

Thursday 9 December 2021

Good two-way business in the past 24 hours with some added volatility on GBP pairs amid the implementation of stricter COVID protection measures in the UK. Variable risk and USD tones but underpinned still overall albeit with the jury stll well and truly out.

COVID/Omicron unknowns continue to lurk and second-guessing on Central Banks will continue to cast a shadow with the Fed meeting on 15 Dec and both ECB and BOE on 16th. Yesterday's BOC decision left rates on hold and some hswkish tones saw a sharp rise in CAD but then a reversal with caution still expected per my note here yesterday.

GBPUSD: Found a base down at the strong 1.3160 support in the sharp drop amid the UK COVID Plan B wobble but a rapid rally only to cap at 1.3240. GBPUSD rally sellers, including me, ever poised while keeping one eye at least on the EURGBP and GBPJPY cross flows.EURGBP: Strong rally to 0.8598 (GBPEUR down to 1.1631) after rising through 0.8560 on the GBP COVID Plan B selling and helping to push GBPUSD lower. Holding 0.8560-65 (1.1682) in the retreat since. Expect more 2-way business amid the general uncertainty. GBPJPY: 149.40 provided the support line after breaking down through 150.00 but capping at 150.70 since amid the variable risk tones and general GBP weakness. Should continue to see good two-way business as risk sentiment continues to be ever-fickle.

Offers: 150.20-25, 150.50, 150.75-80, 151.00, 151.30, 151.60, 151.80-85, 152.00

Bids: 149.80-85, 149.65, 149.50, 149.30, 149.00, 148.75, 148.50

I remain a GBP rally seller across the pairs overall as my preferred trading side albeit still against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.

EURUSD: Support at 1.1260 this after failing at 1.1300 but a strong rally to 1.1350 amid general EUR demand across a few pairs but with some softer USD tones too. Now back to 1.1320 as we continue to range and EUR pairs cap elsehwere too. USDJPY: Capped into 114.00 as I forecast but holding 113.35 in the retreat as we continue to range. EURJPY: 128.00 support now and a sharp rally above 129.00 as Euro sentiment turned around generally. Support now in the retreat at 128.40 in the latest retreat as I type. USDCHF: Support at 0.9200 now with the SNB ever vigilant after a quick look below there yesterday as EURCHF retreated again after failing at 1.0450 amid the uncertainty. EURCHF: Holding 1.0410-20 still with SNB shadow lurking still after failing at 1.0450 where I've been warning sellers were poised.

AUDUSD: Underpinned at these lower levels still for the moment but failing above 0.7180 amid variable risk and USD tones. USDCAD: A good hold of 1.2600 post-BOC and now testing 1.2680 as I type amid some CADJPY supply as oil price caps and with some firmer USD tones generally. Moves remain ever-fickle.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.50 GMT

GBPUSD 1.3205

EURUSD 1.1318

EURGBP 0.8570

GBPEUR 1.1670

GBPJPY 149.91

GBPCAD 1.6738

GBPCHF 1.2170

GBPZAR 20.8600

GBPHKD 10.2830

USDJPY 113.50

EURJPY 128.49

EURCHF 1.0427

EURHKD 8.8113

AUDUSD 0.7160

USDCAD 1.2675

USDCHF 0.9211

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