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GBP: GBP/USD Recovering Well, But EUR/GBP Support More Consequential

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CEEMEABulletUKMarketsForeign Exchange Bullets
  • GBP/USD recovering well off the intraday lows, and an extension of this gradual bounce will erase the overnight leg lower on a move above 1.2732, while 1.2750 marks the more meaningful intraday resistance.
  • Trade in the pair has been led by the greenback and post-Trump market vol primarily, with longer-held support in EUR/GBP helping contain GBP on several occasions across November. These range-defining levels are again under pressure Monday, with today's 0.8270 low well within range of 0.8260/68 layered support. A close at current, or lower, levels would be the lowest since March 2022. 0.8203 below marks the '22 low and weakest print for the cross since the Brexit vote in 2016.
  • It's clear that French politics and continued rate cut talk from ECB members are driving the price action here, which should keep focus on budget deliberations and the sustainability of the Barnier government, and the near-zero implied odds of a BoE cut in December are adding to the pressure.
  • Perhaps notably, a break lower in the cross this month would run against seasonal trends. The average December EUR/GBP return dated back 25 years is +1.1%, with EUR generally enjoying a strong month (+1.5% vs. JPY, 1.5% vs, USD, +1.3% vs. CAD).
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  • GBP/USD recovering well off the intraday lows, and an extension of this gradual bounce will erase the overnight leg lower on a move above 1.2732, while 1.2750 marks the more meaningful intraday resistance.
  • Trade in the pair has been led by the greenback and post-Trump market vol primarily, with longer-held support in EUR/GBP helping contain GBP on several occasions across November. These range-defining levels are again under pressure Monday, with today's 0.8270 low well within range of 0.8260/68 layered support. A close at current, or lower, levels would be the lowest since March 2022. 0.8203 below marks the '22 low and weakest print for the cross since the Brexit vote in 2016.
  • It's clear that French politics and continued rate cut talk from ECB members are driving the price action here, which should keep focus on budget deliberations and the sustainability of the Barnier government, and the near-zero implied odds of a BoE cut in December are adding to the pressure.
  • Perhaps notably, a break lower in the cross this month would run against seasonal trends. The average December EUR/GBP return dated back 25 years is +1.1%, with EUR generally enjoying a strong month (+1.5% vs. JPY, 1.5% vs, USD, +1.3% vs. CAD).