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Brexit Optimism Continues to Buoy Sterling

GBP
MNI (London)
  • Market positioned for Monday's month-end fixes applied pressure on the USD (models suggested strong USD sell signals), which in turn allowed GBP/USD to nudge up to $1.3385.
  • However, short USD positions were caught exposed with the volatility into the fix able to press rate down to $1.3318, recovered to $1.3360 post fix before risk positions were pared into the close which pressed rate to $1.3317.
  • Despite the pullback GBP enjoyed some noticeable buoyancy, noticed as EUR/GBP again reversed away from the Gbp0.9000 level, with market retaining some optimism for a Brexit trade deal, despite deadlines continuing to be pushed back.
  • Risk picked up in Asia in moves led by equity market (Tesla joining S&P 500 in December aiding) which in turn allowed GBP/USD to edge up to $1.3369, with Monday's recovery high at $1.3360 currently providing support.
  • UK final Mfg PMI released at 0930GMT provides domestic data interest. US Mfg PMI and ISM the data interest in NY. Fed Powell speaks at 1500GMT. Fed Brainard, Daly and Evans also speak later. ECB Lagarde speaks at 1700GMT.
  • GBP/USD resistance $1.3380/85, stronger into $1.3398/1.3400. Break here to open a move toward $1.3440/50. Support $1.3320/00.
  • MNI Techs: GBPUSD is trading below recent highs but remains bullish. A break of the Nov 23/26 high of 1.3398 would confirm a resumption of the current uptrend to pave the way for a climb towards key resistance at 1.3482, Sep 1 high. Note that on monthly charts, a multi-year trendline resistance drawn off the Nov 2007 high intersects at 1.3372 . A convincing break over December would point to a reversal. Initial support is at 1.3289, low Nov 27.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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