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Resistance Eyed

GBP

GBP demand was evident around yesterday's WMR fix, which allowed cable to surge higher as it broke through Monday's high, peaking at $1.3894 before ticking away from best levels into the NY close.

  • The rate has lost ~15 pips in Asia-Pac hours, last dealing at $1.3865, with the choppy Chinese equity markets doing little for high beta FX.
  • The daily UK COVID case numbers are moving in the right direction, while daily deaths sit at the highest level seen since March. Re: the latter, the current level of ~130 daily deaths related to COVID is some way shy of the previous peak, with the UK vaccination drive bearing fruit.
  • Elsewhere, Brexit matters continue to bubble in the background. Late on Tuesday it became apparent that the EU has paused its legal action against the UK for alleged breaches of the Northern Ireland Protocol. The EU said that it was pausing legal action to create the "necessary space" to consider UK proposals re: reshaping the agreement.
  • Our technical analyst notes initial resistance at the 50-day EMA ($1.3884). A clear break and close above the level would threaten the bearish view and expose key short-term resistance at the July 12 high ($1.3910). A turn lower would signal the end of the recent bounce and open the way back towards key support in the form of the July 20 low ($1.3572).
  • There is nothing in the way of tier 1 headline releases on today's UK docket, nor are there any notable FX option expiries to consider at today's 10AM NY cut.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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