Pound recovers but jury remain out

Wednesday 24 April 2024

We've seen more two-way FX business in the past 24 hours which has also seen the Pound recover recent losses as BOE's Pill sounded more hawkish than Ramsden had done, perhaps in an attempt to revert some of the revised market expectation on rate cuts plus GBPJPY demand on the better risk tones. Some GBP supply in the rally again as the jury remains while USDJPY remains underpinned helped by the fresh JPY supply but still below 155.00. Gold found some expected dip demand below $2300 but now capped at $2330 with sellers poised to bank some profits still.

German IFO data just out came in better than expected and ECB's Nagel has warned against markets getting too carried away on mutiple rate cuts after June. AUD found buyers on higher than expected Q1 CPI numbers. The Ukraine/Russia war and Middle East tensions still cast their own very large shadow too. Remember as always to identify your preferred risk reward levels and don't get greedy or over-analyse.

Equities have had another 24 hours of support adding to the better risk tones but the jury remains out here too amid all the CB conjecture. WTI capped at $83.50 this time after holding  $80.80-00 in the retreat amid ongoing conjecture. Gold has capped around $2330 per my notes above as profit-taking continued after finding some dip demand below $2300.

GBPUSD: Holding 1.2320-30 yesterday and a strong rally amid the Pill comments and GBPJPY demand double whammy. I remain a seller while we continue to range overall. EURGBP: Holding 0.8590 since capping into 0.8650 amid the GBP rally but the ECB/BOE rate cut conjecture continues. GBPJPY: Capped at 193.00 in the extended GBP/risk-led rally after holding 190.80-00. Sellers will remain poised in these fickle markets but expect some dip demand too in current scenario.

EURUSD: Support around 1.0650-60 yesterday amid some general USD supply but capping into 1.0720 as the two-way buiness continues with ECB conjecture a driver but cuts largely factored in. I remain a rally seller as my preferred side still but patience a virtue as we range tightly. USDJPY: Capping into the key 155.00 area still but underpinned at 154.50-60 again helped by JPY supply returning .No Japanese FX intervention as yet but maybe their patience will be tested soon.

Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk