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FOREX: GBP's BoE Slide Only Outdone by JPY and BoJ Pressure

FOREX
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  • GBP suffered into the close, slipping on the back of a dovish read from the BoE's December meeting. While rates were held unchanged - alongside expectations - markets were taken offguard by the 6-3 vote split among the committee, meaning the MPC doves were just two votes short of a majority, making for firmer pricing for the easing cycle across 2025. As a result, EUR/GBP bounced off a fresh cycle low as the relentless widening of the SFI - ER Z5 spread hit pause.
  • USD/JPY extended the day's rally through the London close as the confluence of BoJ/Fed meetings gave the pair the best session of the year so far. The daily gains of near 300 pips are akin to the rally posted on April 26th, which was followed just the next day by official BoJ intervention to slow the decline of the JPY. That seems unlikely at this juncture given the move today has been triggered by fundamentals, rather than baseless speculation, with the Fed/BoJ confluence moving markets globally, and not just contained to Japan.
  • A pullback in crude oil prices helped NOKSEK take another leg lower, building on the move seen after the Riksbank/Norges Bank rate decisions, making for a clearing of the November 1 low at 0.9672. Having traded over 1.0% lower Thursday, the cross is on track for the second largest one-day fall this year (topped only by the 1.4% fall on Aug 2). Trendline support drawn from the August 5 low is now firmly in view (0.9639 today), clearance of which exposes the Sep 26 low at 0.9572.
  • Friday turns to the UK retail sales release for November, final UMich sentiment data for November as well as the core PCE release - among the last key datapoints of the year for the US. The first Fed speakers following the rate decision are due to appear, with Fed's Daly and Williams set to make appearances on Bloomberg TV and CNBC respectively. 
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  • GBP suffered into the close, slipping on the back of a dovish read from the BoE's December meeting. While rates were held unchanged - alongside expectations - markets were taken offguard by the 6-3 vote split among the committee, meaning the MPC doves were just two votes short of a majority, making for firmer pricing for the easing cycle across 2025. As a result, EUR/GBP bounced off a fresh cycle low as the relentless widening of the SFI - ER Z5 spread hit pause.
  • USD/JPY extended the day's rally through the London close as the confluence of BoJ/Fed meetings gave the pair the best session of the year so far. The daily gains of near 300 pips are akin to the rally posted on April 26th, which was followed just the next day by official BoJ intervention to slow the decline of the JPY. That seems unlikely at this juncture given the move today has been triggered by fundamentals, rather than baseless speculation, with the Fed/BoJ confluence moving markets globally, and not just contained to Japan.
  • A pullback in crude oil prices helped NOKSEK take another leg lower, building on the move seen after the Riksbank/Norges Bank rate decisions, making for a clearing of the November 1 low at 0.9672. Having traded over 1.0% lower Thursday, the cross is on track for the second largest one-day fall this year (topped only by the 1.4% fall on Aug 2). Trendline support drawn from the August 5 low is now firmly in view (0.9639 today), clearance of which exposes the Sep 26 low at 0.9572.
  • Friday turns to the UK retail sales release for November, final UMich sentiment data for November as well as the core PCE release - among the last key datapoints of the year for the US. The first Fed speakers following the rate decision are due to appear, with Fed's Daly and Williams set to make appearances on Bloomberg TV and CNBC respectively.