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GBP Knocked by UST Yields. Month-End Flows in Focus.

GBP
MNI (London)
  • Rising UST yields Thursday picked up momentum following a poor US 7-7r note auction which in turn provided a sharp boost for the USD.
  • This demand dropped GBP/USD down to $1.4000, extending the corrective pullback away from Wednesday's high of $1.4037, with recovery efforts capped around $1.4050 before rate closed the day at $1.4008.
  • Move in GBP/USD prompted a sharp recovery in EUR/GBP, the rate having made an appearance outside the base of its 1.0% 10-dma envelope Wednesday, the momentum taking the cross back through its key 10-dma and closed above.
  • Early Asia picked up the USD demand tone and pressed GBP/USD down to $1.3951. Rate managed to recover to $1.4022 before fresh sales emerged which have eased rate to an extended pullback low of $1.3924 into Europe.
  • EUR/GBP has extended its break above its 10-dma (current Gbp0.8679), initial resistance seen at Gbp0.8737(76.4% Gbp0.8791-0.8541) with the top of the 1.0% 10-dma envelope now in view at Gbp0.8766.
  • UST yields remain key. Month-end flows also relevant today, early model suggestions predicted GBP/USD demand to be seen at today's fixes. However, with moves in equity markets that signal might not be as strong.
  • GBP/USD support $1.3926/24(76.4% $1.3830-1.4237/Int.Day low) ahead of $1.3902(50% $1.$1.3567-1.4237), $1.3880, $1.3850.
  • A light UK data calendar. BOE MPC Haldane (hawk) speaks at 1000GMT, Ramsden (dove) at 1230GMT.
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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