Jury still out

Mike Paterson
Dec 18, 2023
2 min read

Monday 18 December 2023

The conjecture continues with markets second-guessing the timing and speed of Central Bank rate cuts year following last week's slate of latest decisions and rhetoric. Next CB off the rank is the BOJ who start their meeting today and announce tomorrow and who are between a rock and a hard place at the moment following recent comments.

German IFO data just out came in below expectations which will give the ECB further food for thought after reports from those ECB "sources" saying they weren't ready to cut before March at very earliest and stemming EUR losses in Asia. UK and EU CPI data out this week. The ongoing Middle East back-story sadly continues meanwhile and casts its own shadow over markets but still not driving prices.

Equities fell then rallied in NY trading and generally steady in early European trading with the jury still out on the speed of cuts by FOMC et al. WTI has capped at $72.60 this time as sellers remain poised amid global demand concerns but holding the higher level of $71.50 on Friday and again this morning after an extended dip to test $70.50 in NY. Gold has capped at $2045 again but now underpinned at $2015-20 amid the US rate cut speculation.

GBPUSD: Holding 1.2650-60 again in the retreat from 1.2760 then 1.2720 amid the variable USD sentiment and BOE speculation. Some good jobbing opportunities again and I remain poised for further rally sells when momentum fades. EURGBP: Good two-way business again as expected amid the BOE/ECB rate cut speculation with support at 0.8585 again this time but capping into 0.8610 as I type on the rebound. GBPJPY: Capping into 181.00 this time amid the general JPY demand still into BOJ but holding 179.80 this time and on the rise again this morning amid some better risk tones. Sellers remain poised but BOJ pivotal.

EURUSD: Support around 1.0890 in the various retreats but capping around 1.0930 this morning amid all the CB conjecture. I remain a rally seller overall. USDJPY: Finding support at 141.50 then 142.00 amid some general USD demand but good two-way business still capping into 142.50 again. I remain a rally seller as preferred side overall at these still elevated (albeit slightly more balanced) levels. BOJ pivotal though of course.

For more detailed analysis across a variety of pairs email mike@mspfx.co.uk

Interbank rates: 08.40 GMT

GBPUSD 1.2685

EURUSD 1.0916

EURGBP 0.8605

GBPEUR 1.1620

USDJPY 142.40

GBPJPY 180.62

GBPCAD 1.6926

GBPCHF 1.1002

GBPZAR 23.3071

GBPHKD 9.8621