Softer Pound as markets wait on BOE
Thursday 4 February 2021
Today brings us the latest decision from the Bank of England MPC at 12.00 GMT and the jury remains out on whether we will see any rate cut or not but it's reported we should finally get their long considered thoughts on negative interest rate use.
Some chatter about a rate cut to 0.0% today but many thinking the UK vaccine roll out success will help keep their powder dry. I'm not so sure that the UK economy can recover as quickly as some suggest and the Pound has seen a few losses across the board amid the uncertainty. I will try and provide some more thoughts later this morning.
USD demand notable still overall but once again the Forex jury remains out amid all the noise so keep playing what's in front of you and don't over analyze.
GBPUSD yesterday found a cap at 1.3650 then 1.3620 and now testing 1.3580 amid the general USD demand and EURGBP rally back up to 0.8835 from another test of 0.8800 as per my tweets.EURGBP tested 0.8800 again but has failed to hold above 0.8835 again as I type as we continue to range ahead of the BOE. GBPJPY found a decent cap this time at 143.60 as GBP and risk sentiment wobbled but equally good support at 142.80 so far with USDJPY still underpinned.
I still have a naturally bearish stance on GBP overall and remain poised to sell into rallies but respecting dip demand still with price action ever fickle. Equally a case still for going long in the dips therefore as we continue to range. Patience and not getting greedy remain key but let's see what the BOE has to add to the mix.
USDJPY has now found a base at 105.00 but progress north somewhat slowed by wobbly risk sentiment and with the Japanese year-end JPY repatriation by corporates in the mix as per my recent mentions. EURJPY failed at 126.50 as USDJPY and EURUSD found rally sellers again but holding 126.15 so far. EURUSD has finally broken down through the strong 1.2000 area taking out barrier option interest there too. Cross-pair flows still in evidence too as per my mentions here and tweets.USDCHF has held above 0.8980 this time amid the soggy EURUSD action and with the SNB ever watchful with EURCHF holding 1.0800 per my tweets but failing into 0.9030 so far this morning.
AUDUSD has held 0.7600 shrugging off the general USD demand amid some GBP and EUR supply and since been back up to test 0.7650 but sellers still poised.USDCAD found a good cap this time at 1.2810 as oil price rallied further but held 1.2760 then 1.2780 amid the firmer USD tones.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.30 GMT