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GBP/USD Recovery Struggles, Month-End EUR/GBP Flow an Influence?
- 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.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.