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GBP/USD Rests on $1.3720 into UK GDP. Month-end Flow and UST Yields in Focus.

GBP
MNI (London)
  • Recovery off Tuesday's low of $1.3706 extended to $1.3742 into the close.
  • Asia took over the baton and edged rate on to $1.3751 before strong USD demand emerged at the Tokyo fixes which provided a counter and eased rate back to $1.3719.
  • Recovery efforts were capped at $1.3730 before it settled between $1.3720/30 into the Europe open.
  • General USD strength, driven by risk aversion and higher UST yields, has fuelled the corrective pullback in GBP/USD, but effects less than that felt by EUR, EUR/GBP continuing to hold toward recent lows, Gbp0.8506(Asia range Gbp0.8525/35) as well as below its key 10-dma, currently at Gbp0.8570.
  • Month-end flow suggested to benefit GBP, especially vs JPY. We await final model calls.
  • UK Q4 GDP 0600GMT, median 1.0%qq, -7.8%yy. Q4 Current Account median -34.8.
  • GBP/USD support into $1.3700, break of $1.3690 to expose $1.3670/63. Below brings the base of the 1.0% 10-dma envelope at $1.3645 into play, break opens a deeper move toward $1.3590/60 area. Resistance $1.3750/60, $1.3780/85.
  • MNI Techs: GBPUSD traded lower Tuesday and maintains a bearish tone. Last week, the pair cleared its bull channel base from the Nov 2, 2020 low. Furthermore, price also traded through the 50-day EMA and a former key support at 1.3779, Mar 5 low, triggering an important short-term reversal. The focus is on 1.3663 next, Feb 5 low. On the upside, the former channel base at 1.3873 provides an initial firm resistance.
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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