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  • Writer's pictureMike Paterson

Pound higher again then retreats in volatile session

Wednesday 24 February 2021

Fun and games in Asian trading amid the usual thin liquidity conditions which saw the Pound soar as markets/hedge funds once again got optimistic on the UK vaccine rollout and lockdown easing programme. Stop loss trades triggered on EURGBP through 0.8600 saw lows of 0.8542 as GBPUSD took out sell interest in a sharp rally from 1.4130 to 1.4235 officially, although there is talk of trades above 1.4280 in the panic.

Since then though we've seen a solid retracement to 0.8589 and 1.4150 but GBP demand still notable overall helped by risk-on sentiment putting a bid under GBPJPY and GBPCHF. One thing the moves in Asia prove is to remind traders to leave stop losses to minimize losses in such extraordinary moves but equally wish list limit orders too given the rapid reactions/reversals. GBP seeing some further retreat per my tweet. GBPUSD needs to hold above 1.4125-30 and EURGBP below 0.8600 for recent GBP underpinning to continue or lese markets might think that last move higher was the last hurrah for a while and somewhat engineered...

Yesterday US Federal Reserve Chair Powell disappointed a few inflation/reflation hawks by keeping dovish tones which should have been no real surprise and we've seen equity/commodity markets move higher again amid the stimulus hopes. Today sees the latest UK Treasury Select Committee getting testimonies from BOE gov Bailey and other MPC members at 14.30 GMT.

Reminders all over the place therefore that we should assume nothing and not over-analyze but remain poised to make the most of market moves however fickle.

GBPUSD broke up through 1.4100 in post-European/later NY trading and was testing 1.4125-30 when that Asian explosion kicked in. Caps at 1.4200 and 1.4180 since. EURGBP finally broke down through 0.8630 but was still finding dip buyers into 0.8600 before it all kicked off. Lows of 0.8541 since ( GBPEUR highs of 1.1708) but now testing the 0.8600 pivot area again. GBPJPY found a decent base at 148.00 then 148.50 148.20 amid core pairs finding dip demand again and better risk tones. 150.00 remains a good line in the sand though to the topside still.

I remain poised to sell GBP into rallies as a jobbing preference but respecting dip demand still with price action ever fickle. Equally a case still for going long in the dips therefore as we continue to range. Patience and not getting greedy remain key.

USDJPY found dip demand notable still around 105.00 amid some further JPY supply as per my warning yesterday and now back up testing 105.80. EURJPY has dip demand now at 128.00 but 128.80 proving a step too far atm. EURUSD still finding 1.2180 a step too far but equally underpinned at 1.2130 amid all the variable cross-plays still. USDCHF remains underpinned and finding good support now at 0.9000 amid the risk-on plays (CHF as a funding currency) with EURCHF also underpinned and looking at the key 1.1055-60 area as the SNB remains ever watchful/helpful.

AUDUSD found support at 0.7880 then 0.7900 this time where we had those large expiries in play yesterday to test 0.7950 as risk sentiment/ metal prices keep lending support.USDCAD capped at 1.2640 again as oil price and risk rallied but equally holding 1.2560 atm.

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

Interbank rates: 08.55 GMT

GBPUSD 1.4170

EURUSD 1.2168

EURGBP 0.8583

GBPEUR 1.1650

GBPAUD 1.7894

GBPCAD 1.7814

GBPJPY 149.87

GBPZAR 20.5933

GBPHKD 10.9705

USDJPY 105.76

USDZAR 14.5622

EURJPY 128.64

EURCHF 1.1031

EURHKD 9.4330

AUDUSD 0.7918

USDCAD 1.2572

USDCHF 0.9071

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