Markets consolidate, leaving GBP vulnerable...>

FOREX: Markets consolidate, leaving GBP vulnerable

-Consolidation was largely the theme among DMFX Monday, with GBP the poorest

performer. GBP/USD made light work of Friday's low on the way down before

finding support ahead of the $1.25 handle. GBP/USD bears will still be eyeing

the year-to-date lows printed last week at $1.2440.

-Other currencies were relatively non-directional, with AUD and NZD holding the

China GDP-inspired gains throughout the day while GBP and CAD in particular

looked weak. EMFX looked slightly better, with ZAR, TRY and RUB all clocking

gains against the USD despite the poor turnout from US equity markets.

-Short-end implied vols generally edged higher but stayed well within recent

ranges after slipping sharply last week. GBP vols were the standout, with the

vol term structure flattening alongside the weakness in spot.

-Focus Tuesday turns to New Zealand CPI, UK jobs data, German ZEW survey and US

retail sales. Speeches are scheduled from BoE's Carney, ECB's Villeroy and Fed's

Powell, Bostic, Bowman, Kaplan and Evans. The Fed speeches will be carefully

watched as the blackout period begins at the end of Friday.