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GBP Off YTD Highs But Underlying Tone Remains Buoyant

GBP
MNI (London)
  • GBP/USD posted a fresh YTD high of $1.3759 in early Europe Wednesday before upside momentum quickly faded through the 0800GMT fix.
  • Heavier reversal pressure from EUR sales, following dovish comments from ECB Knot(a usual hawk) which dragged GBP/USD to $1.3721, but some pressure was diverted into EUR/GBP which was pressed down to challenge recent low at Gbp0.8829.
  • EUR/USD break below $1.2100 in early NY pressed GBP/USD down to $1.3659 but again pressure diverted into EUR/GBP as the cross dropped to Gbp0.8813.
  • GBP/USD recovered to $1.3731 before it closed around $1.3690.
  • Early Asia saw rate touch $1.3695 before general risk aversion saw rate move through Wednesday's low to $1.3651 before it recovered to $1.3683. Rate settled above $1.3660 but was seen meeting further headwind resistance above $1.3680 into Europe.
  • EUR/GBP traded between Gbp0.8840/55 in Asia, off Wednesday's lows but remains below its key 10-dma (current Gbp0.8872).
  • GBP support $1.3651/45(Int.Day low/76.4% $1.3610-1.3759), a break of $1.3640 to expose the Jan26 low at $1.3610. Resistance $1.3695/1.3705 ahead of stronger $1.3718/34(61.8%-76.4% $1.3759-1.3651/ $1.3731 NY high Jan27).
  • A light domestic data calendar. Focus on US GDP, Weekly Claims and ECB Schnabel speak. Equity markets the barometer for risk as month-end approaches.
  • MNI Techs: GBPUSD traded to a fresh high of 1.3759 yesterday and despite a pullback from session highs, the uptrend remains intact. Yesterday's gains maintain the bullish price sequence of higher highs and higher lows. Attention is on 1.3773 next, May 1 2018 high. Near-term firm support has been defined at 1.3520, Jan 18 low. A breach would signal scope for a deeper S/T sell-off and expose 1.3452, Jan 11 low. Initial support is at 1.3610, Tuesday's low.
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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