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GBP/USD Recovery Struggles, Month-End EUR/GBP Flow an Influence?

GBP
MNI (London)
  • GBP/USD touched an extended high of $1.4211 Tuesday only to reverse through the 0800BST fix, the move continuing into NY to see rate pressed down to $1.4116 in post 1600BST fix trade. Rate recovered to $1.4161, closing the day at $1.4151.
  • Moves were seen driven by activity in EUR/GBP, the cross making the break above Gbp0.8650 before momentum faded at Gbp0.8673. Rate dipped back to challenge the broken Gbp0.8650 resistance before closing the day at Gbp0.8660.
  • General pressure on the USD is providing buoyancy for GBP/USD but currently countered by EUR/GBP as it holds above its key 10-dma (current Gbp0.8620) . Whilst above seen exposing top of its 1.0% 10-dma envelope, currently at Gbp0.8706. Pressure in the cross likely month-end related. Cross support Gbpp.8650, Gbp.8620
  • Early consolidation in Asia between $1.4140-55 before rate edged to $1.4172 on further USD weakness, but trades back toward $1.4150 into Europe.
  • Focus in UK will be on ex PM adviser Dominic Cummings appearance in front of joint inquiry on lessons learned from pandemic, could be bruising for PM Johnson.
  • Holidays May31 in US and UK has today as month-end value for USD and GBP pairs. Chance we see US corporate USD demand emerge into NY. Month-end fixing interest likely to be transacted Friday and Monday.
  • MNI Techs: GBPUSD continues to consolidate. Outlook remains bullish. Sights on 1.4237, Feb 24 high and the bull trigger. A break would reinforce a bullish case and importantly confirm a resumption of the broader uptrend that started March 2020. On the downside, initial firm support is unchanged at 1.4006, May 13 low where a break would suggest scope for a deeper corrective pullback.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com

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