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Pullback Considered Corrective

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Holding Above Recent Lows

US EURODLR OPTIONS

BLOCK, Large 3Y Midcurve Put Condor

Sterling Buoyant Ahead of EU Summit

CABLE
MNI (London)

Positive risk allowed cable to extend its recovery above $1.3000 Friday, the rate pushing to a high of $1.3050, closing the week at $1.3046. PBOC tweak in the reserve requirement for some FX forwards was seen applying brakes on recent CNY/CNH appreciation which in turn saw USD marked higher into Asia. Cable opened at $1.3016 before it settled through the balance of the Asian session between $1.3020/40, pushing through Friday's high at the Europe open to $1.3057. Focus on this week's EU Summit on Oct15/16, covering PM Johnson's deadline for a trade agreement of Oct15. However, market suggests that despite soundbites concerning the deadline, there is optimism that talks to continue through to the end of October, after the EU signal a move into the 'tunnel', with hopes of an agreement by year end. Resistance noted between $1.3070/80 ahead of $1.3100. Support $1.3020 ahead of $1.3000. Rate closed Friday above its 55-dma which could add to some technical positivity. A light UK data calendar Monday, attention on BOE Haskel(1500BST), then BOE Bailey at 1700BST. Brexit and US fiscal headlines remain key directional drivers.

MNI Techs: GBPUSD cleared key resistance at 1.3007 Friday, negating recent bearish signals and confirming a resumption of the current bullish cycle. This has opened 1.3079 ahead of 1.3128. The former is a Fibonacci retracement and the latter marks the former trendline support drawn off the Mar 20 low. To re-engage with any bearish themes, Cable needs to break 1.2846, Oct 7 low. This would open 1.2806, Sep 30 low.

MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com