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Eyeing $1.4000 Europe Open

GBP
MNI (London)
  • Corrective pullback away from Thursday's YTD high of $1.4237 extended to $1.3888 in pre NY trade Friday, before rate enjoyed some buoyancy from month-end demand, recovering to $1.3987 ahead of the 1600GMT fix, settling around $1.3930 into the close.
  • EUR/GBP reflected the early pressure on the GBP as rate extended its move above its key 10-dma (Friday Gbp0.8661) to Gbp0.8731, but had corrected back to close at Gbp0.8669.
  • The passage of the US fiscal stimulus bill through the House provided for improved risk outlook, GBP/USD managing to edge up from its early Asia low of $1.3919 but failed to break back above $1.4000 (high $1.3999).
  • Rate drifted back to $1.3964 but had picked up fresh demand ahead of Europe with rate currently trading around $1.3994.
  • EUR/GBP opened Asia at Gbp0.8704 before dropping back, the rate now at Gbp0.8638 and below its 10-dma (current Gbp0.8652), which if holds turns outlook back to bearish.
  • UK lending data at 0930GMT alongside final Mfg PMI data.
  • UK Budget Wednesday provides the main domestic focus. Chancellor needs to support the economy at same time as damage control for public finances. Furlough scheme expected to be extended, lot of talk of a hike in corporation tax.
  • Support $1.3964, $1.3920, $1.3888. Resistance $1.4000, $1.4020/30, $1.4060/65.
  • MNI Techs: Cable appears vulnerable following the pullback from the Feb 24 multi-year high of $1.4237. The pullback has been sharp and persistent, the pair moving back into the range highlighted by a bull channel drawn off the Nov 2, 2020 low. The pair has also tested the 20-day EMA at 1.3900. A clear break exposes $1.3823 and the key near-term support at $1.3776, Feb 12 low. Key resistance has been defined at $1.4237.
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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