PSNB Provides Early Focus

Chancellor Sunak's fiscal plan was taken well by the market Thursday, the pound having lifted ahead of the announcement to replace the COVID related furlough scheme, cable edging on to $1.2781. The move led to a decoupling with EUR/USD, allowing EUR/GBP to ease away from its 10-dma. Volatile session through NY as cable dropped back to $1.2708 into the 1600BST fix (a stand out seller was noted into this event) but was able to recover to $1.2774 before it closed around $1.2745. EUR/GBP traded down to Gbp0.9113 in NY, closing the day around Gbp0.9157, with the 10-dma currently coming through at Gbp0.9166. Mild risk on in Asia allowed cable to edge higher through the session, pushing up to a high of $1.2762 into Europe. Early focus on UK borrowing data at 0700BST (PSNB median expectation Gbp39.5bln, Gbp38.0bln ex interventions). US equities/UST yields remain the key driver of markets via USD strength. COVID spread also of note, with Brexit in the background. Month-end approaching next week(Wednesday) with early models suggesting USD buys. Monday will be month-end value and often sees US corporate USD demand as well. EUR/GBP currently holds below its 10-dma and should keep near term view bearish, a break above the negate. Cable support $1.2730 ahead of $1.2710/1.2690 then recent low of $1.2676. Resistance remains around $1.2780 ahead of $1.2800, stronger into $1.2840/50.
MNI Techs: GBPUSD is consolidating but maintains a bearish outlook. This week's move lower marks an extension of the current bearish run having confirmed a clear break of support at 1.2763, Sep 11 low. Prices have also breached the 61.8% retracement of the Jun 29 - Sep 1 rally at 1.2722. This reinforces bearish conditions and opens 1.2644, Jul 22 low. Key resistance is at 1.3007, Sep 16 high. Initial resistance however resides at 1.2867, Sep 22 high.