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  • Writer's pictureMike Paterson

Perky Pound as risk appetite returns

Thursday 23 December 2021

We're seeing some positive risk appetitite with equity/commodity markets and yields underpinned still. Gold too though and now back above 1800. Potential Omicron concerns/fallout still lurking though despite the happy-clappy brigade being back in town and markets second-guessing Central Banks still. JPY and USD supply prevailing again helping to underpin the Pound.

Last few sessions before Xmas and we can expect some reduced liquidity/increased volatility and indeed next week into New Year. As always, don't over-analyze or second-guess but keep your focus on price action in core and cross-pairs and identify recent ranges to see whether we hold or break and what levels present value for money. Patience will invariably be a virtue but don't confuse patience with being stubborn.

Just to let you know that I'll be taking a well-earned/needed Xmas break and so after posting tomorrow's update i will return on Thursday 30th.

GBPUSD: A steady rally helped by risk-on GBPJPY demand/EURGBP supply and a support line mow around 1.3340 and testing 1.3380-1.3400 resistance as I type. GBPUSD rally sellers, including me, ever poised while keeping one eye at least on the EURGBP and GBPJPY cross flows. To that end therefore I'm continuing to sit this rally out and not getting involved. EURGBP: Support at 0.8480-85 now broken on the better risk appetite whioh has seen EUR selling again and GBPJPY demand underpinning the Pound. Larger support line at 0.8450 (GBPEUR resistance 1.1835) the next target. GBPJPY: The march higher continues as the risk-on rally enjoys further momentum. 152.00 now a decent support line amid the firmer USDJPY. Sellers remain poised on this and core pairs but caution required for the moment. Renewed BOJ remarks about JPY weakness helping the economy helping to give another shove higher too.

I remain a GBP rally seller across the pairs overall as my preferred trading side but being patient as ever. These markets are ever-fickle so good/tight position management essential.

EURUSD: 1.1290-00 now providing support but failing into 1.1340 amid the cross play and risk flows not to mention some large option interest today. USDJPY: Good support at 114.00 amid the JPY supply but failing to break up through strong resistance at 114.40. EURJPY: 129.00 support now but mixed tones still with risk-on EUR and JPY supply matching off against each other and helping to cap around 129.50. USDCHF: Failure yesterday above the pivotal 0.9220-30 area amid the general USD supply and EURCHF being capped by the risk-on EUR supply but with the SNB ever vigilant. EURCHF: Support coming in at 1.0400-10 again with the SNB shadow always lurking but rallies through 1.0430 tempered by EUR supply elsewhere.

AUDUSD: 0.7180-00 support as we see continued risk-on AUDJPY demand and firmer gold/commodity prices and now testing 0.7240. USDCAD: Solid cap now at 1.2920 amid USD supply, underpinned oil prices and risk-on CADJPY demand.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.40 GMT

GBPUSD 1.3376

EURUSD 1.1315

EURGBP 0.8465

GBPEUR 1.1819

GBPJPY 152.92

GBPCAD 1.7125

GBPCHF 1.2335

GBPZAR 21.0889

GBPHKD 10.4230

USDJPY 114.32

EURJPY 129.36

EURCHF 1.0421

EURHKD 8.8189

AUDUSD 0.7230

USDCAD 1.2823

USDCHF 0.9209

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