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  • Writer's pictureMike Paterson

Pound in a whirl as BOE steps in

Thursday 29 September 2022

Another lively 24 hours in the ever-fickle world of Forex as the BOE stepped in to prop up the gilt market after facing another crisis as pension funds were being margin-called, and some.Cue the algos spiking the Pound sharply higher then markets taking it sharply lower again before finally settling down and ending the day even higher than the original spike. Crazy times.

Risk sentiment generally has also had a roller-coaster ride with equities lower, higher then lower again, as has been oil and gold price moves. Sharply higher German CPI regionals this morning will give the ECB's recent hawkish tones some crebility but the economic landscape remains a huge concern. US Dollar supply yesterday was notable but good dip demand as the jury remains well and truly out.

Month-end flows for spot-date trading at the 4pm London fix were suitably inconclusive given I said we had mixed signals but some EURUSD rally selling notable again while USDCAD and USDJPY (touted to be the biggest movers) have both found good dip demand.

Conjecture remains in these ever-fickle markets so don't over-analyse but be ready with your preferred levels/strategy. Look for appropriate risk verus reward. Discipline is key as always but equally hesitation can often ruin a great idea.

GBPUSD: Up to 1.0840 on the BOE gilt intervention then 1.0530 beore ending the day around 1.0880.Crazy times. Patience a virtue again but I prefer rally-sell side still. Cross flows still having a big impact too as well as the UK govt/BOE fallout.

EURGBP: Back in a tight 0.8925-0.8985 range after yesterday's BOE-led fall to 0.8850 and rebound to 0.9070. Core pairs back to moving in tandem amid the variable risk and USD tones for the moment. Expect more two-way business still, pending further news shocks from both sides of the English Channel. GBPJPY: Also back tightly bound amid the fragile risk tones after yesterday's BOE-led moves but better bid overall with core pairs both finding dip demand for the moment.

EURUSD: Solid rally from 0.9550 amid some softer USD tones yesterday but failing at 0.9750 and now holding 0.9630 in the retreat where it wiped its feet on the way up yesterday. Cross and month-end flows, Ukraine and ECB conjecture all in the frame quite apart from USD flows. USDJPY: Capping above 144.80 again and duly fell in the general USD retreat to test 144.30 again. Rinse n repeat. Definitely expecting more 2-way business. EURJPY: Underpinned at 139.00 now but sellers prevailing at 140.50 amid all the variables.USDCHF: Holding 0.9750 in the general USD retreat yesterday but now capping above 0.9850 s EURCHF ranges and EURUSD finds dip demand at 0.9630.SNB will be keeping an eye on matters still. EURCHF: Ranging now between 0.9460-0.9520 after holding 0.9430.

AUDUSD: Also staging a decent rally yesterday amid the USD supply but capping at 0.6530 before retreating to 0.6435. Good two-way pips whatever your bias. GBPAUD had its fun n games yesterday after the BOE stepped in but holding 1.6600 in the retreats again now. NZDUSD capped into 0.5750 after its own impressive rally and holding 0.5650 in latest retreat. GBPNZD capping around 1.9100 but underpinned 1.8900 for the moment as core pairs range. USDCAD: Decent support coming at 1.3600 yesterday after the retreat from 1.3800 and now testing 1.3750 as oil retreats a little and potential month-end flows with CADJPY selling notable too.

Let's continue to be careful out there.

Interbank rates: 08.50 BST

GBPUSD 1.0773

EURUSD 0.9652

EURGBP 0.8961

GBPEUR 1.1159

GBPJPY 155.88

GBPCAD 1.4825

GBPCHF 1.0633

GBPZAR 19.4785

GBPHKD 8.4132

USDJPY 144.68

EURJPY 139.62

EURHKD 7.5393

EURCHF 0.9496

AUDUSD 0.6447

NZDUSD 0.5660

USDCAD 1.3732

USDCHF 0.9833

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