Tuesday 8 December 2020
Another day and another lively day for the Pound as the Brexit debacle continues to play out. Good two-way business to be had and given further momentum yesterday evening on the eventual release of a statement following the VDL-BJ phone conversation. GBP buying followed from the happy-clappy algos and traders but I warned on Twitter sbout getting too carried away and the Pound has duly given up a few of its gains. I hope the steer helped.
As I said yesterday we have a busy and crucial few days ahead not only with Brexit talks but also the latest ECB monetary policy decision/rhetoric this Thursday but also the EU Council meeting on Thurs/Friday. Now throw in Johnson's trip to Brussels on Wednesday for a few more algo-stirring headlines.
COVID is still casting its sad shadow and while we must applaud the first vaccine jab rolling out this morning in the UK we are by no means out of the woods. Markets are still second-guessing the fall out still to come and the US stimulus package unknowns remain in the mix. General uncertainty is keeping risk sentiment fragile and Gold has taken full advantage to post 2-week highs with Bitcoin also hanging onto recent gains near record highs.
GBPUSD yesterday held 1.3230 on its Brexit-accelerated fall but staged a decent rally to test 1.3400 only to drop back to test 1.3320 this morning. EURGBP failed into 0.9150 after its initial sharp rally but fell on the VDL-BJ statement into 0.9040. I remain a dip buyer of this pair overall but still respecting the Brexit-led volatility.GBPJPY based at 137.80 and capped at 139.40 amid the variable GBP and risk sentiment.
I stay poised to sell GBP rallies as my preferred side and buy back in the dips as ever.Patience continues to be a virtue and rally-selling in GBPUSD is still bringing some reward but entry level key as always. Definitely still expecting some dip demand amid all the volatility as I've warned for a while now. Brexit still the large elephant in the room.
USDJPY failed around 104.30 again after some general USD demand but tempered by JPY risk-off buying and some large option expiry interest at 104.00-05 today. EURJPY has found some solid support around 126.00 again after failing around 126.50 this time. EURUSD staged another decent rally from the 1.2080 area but finally ran out of puff and capped around 1.2160 and now tightly bound as the jury remains out. Don't forget that Brexit has EUR implications too. Large option expiry interest today. USDCHF is tightly bound amid the variable EURUSD but held 0.8880 again despite EURCHF falling to test 1.0780 but with the SNB still ever watchful.
AUDUSD has capped into 0.7450 yet again and fallen back into 0.7400-10 once more where we also have large options today. USDCAD failed at 1.2830 this time around and now testing 1.2775-80 again on the retreat as I type amid the variable USD and risk sentiment.
Markets are ever-fickle so don't forget to contact me if there's areas that you might need some further help with.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.25 GMT