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FR Business Climate At Highest Since Apr 2018

  • Continued Brexit trade deal optimism allowed GBP to retain its recent impulsive tone through Thursday trade, GBP/USD recovering off its initial FOMC react low of $1.3451(late Wednesday) to an eventual high of $1.3624 high in NY Thursday.
  • GBP/USD eased to $1.3545 as negative comment on Brexit negotiation progress emerged, but both sides remain at the table.
  • 'Deadline' has now been moved to Sunday, for a deal to be ratified in EU before Dec31, though some now speak that negotiations could move into the new year. Both sides are seen wanting a deal which is keeping hopes alive.
  • GBP/USD touched an early high in Asia at $1.3590 before a general USD correction, led by USD/JPY, emerged. GBP/USD drifted of to a low of $1.3520 but met demand into the dip which has edged rate back toward $1.3550 into Europe.
  • UK Retail Sales provides the Europe opening interest (median -4.0%mm, 4.1%yy ex-fuel/-4.2%mm, 2.4%yy incl fuel). UK CBI Trends at 1100GMT.
  • Brexit headlines remain key for GBP direction. Possible position adjustments into the weekend, as attention moves across to Sunday and opening Monday reaction activity, but underlying deal optimism persists.
  • MNI Techs: GBPUSD traded higher Thursday to extend the climb off the Dec 11 low of 1.3135. The outlook is bullish despite today's pullback. The pair has cleared 1.3539, Dec 4 high. This confirms the end of the corrective phase between Dec 4 - 11. An extension higher would open 1.3677, the 76.4% retracement of the 2017 - 2020 downtrend. On the downside, key support lies at 1.3135, Dec 11 low. A firm initial support lies at 1.3364, the 20-day EMA.
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