Another week, same uncertainty.

Mike Paterson
May 15, 2023
2 min read

Monday 15 May 2023

Elections in Turkey leave Erdogan facing a run-off on 28 May after failing to secure the 50% to retain his presidency even though his party plus parliamentary allies did better than expected overall. The Lira has been sold off amid the uncertainty but there's reports of the central bank stepping in to support. Meanwhile in Japan plenty of chatter from both the BOJ and government over past and future policy and the jury remains out on YCC moves but some signs of tension between the two.

In the US the debt ceiling talks between Biden and Congress have been rescheduled for tomorrow with some reports that week-end backroom talks have had some positive outcome. Friday saw some solid USD demand in very messy markets again led by higher Michigan Index longer-term inflation projections but some selling returning in Asia albeit with JPY supply notable again on better risk sentiment and helping to underpin cross and core pairs.

Equities are once again off their lows as European trading gets underway in what has become a regular pattern with WTI bouncing off $69.50 after capping into $71.50 again on Friday amid the ongoing global recession/slowdown fears. Those natural sellers of Gold will be looking to prevail again as we test $2020 again after a good hold of $2005-10 in the latest retreat.Ukraine/Russia war continues to be the main geo-political elephant in the room with ongoing US/China/Taiwan tensions in the mix too The world remains a fragile place for sure.

Remember as always, focus on the price action and let the algos do the heavy lifting/dropping amid all the second-guessing. The important thing is to identify your preferred risk/reward entry/exit levels prior and be poised to execute.

GBPUSD: A cap at 1.2540 then 1.2500 on Friday and some pips banked into the 1.2450 retreat where I warned on Friday of bids building. Some GBPJPY better-risk demand plus USD supply helping to lift to 1.2490 this morning but I remain a rally seller as my preferred side. EURGBP: Capping around 0.8725 this time after Friday's hold of 0.8695-00. Expect some two-way business still overall as core pair sentiment flutters around. GBPJPY: Basing around 168.50 on Friday and rallying to look at 170.00 with USDJPY making solid gains and JPY supply notable generally. Sellers ever-poised when risk sentiment turns lower.

EURUSD: Support around 1.0850 in Friday's extended retreat amid the USD demand but sellers, including me, remain poised. USDJPY: Support coming in between 134.60-80 on Friday amid the USD demand and solid JPY supply saw gains through 135.25-50 before eventually capping at 136.25. Support now coming in at 135.60-80. I still prefer to sell rallies/be long JPY overall but caution still required in these ever-fickle markets as I've been warning.

More detailed analysis across a variety of pairs available from mike@mspfx.co.uk

Interbank rates: 08.20 BST

GBPUSD 1.2475

EURUSD 1.0866

EURGBP 0.8711

GBPEUR 1.1478

USDJPY 135.83

GBPJPY 169.47

GBPCAD 1.6835

GBPCHF 1.1194

GBPZAR 23.7540

GBPHKD 9.7219