Pound under pressure still as May prepares to leave

Friday 17 May 2019

I've warned for a long time about the UK political fallout regardless of the Brexit outcome (but due to it essentially) and now with May seemingly setting out a timeline for her (long over-due) departure we've seen the Pound come under additional pressure, but certainly not entirely down to that as some news outlets would have us believe. Maybe the market is finally waking up to the reality but my readers have been aware of the on-going dangers for months.

Understandable lack of progress on the cross-party Brexit talks adding to the uncertainty and I will simply refer you to my earlier comments this week, and previously, about May's deal/resignation trade-off. It still looks like we won't get the former but increasingly likely to see the latter.

GBPUSD has retreated further to post fresh lows of 1.2776 not seen since mid-February helped by GBPJPY and GBPCHF supply again as risk-off sentiment prevails with EURGBP also underpinned again.

EURGBP dip-buyers have been prevailing again on the GBP supply but similarly still finding sellers around 0.8750 for the moment (GBPEUR support 1.1425). GBPJPY remains on the back-foot on the risk-off sentiment/GBP supply as I've been warning but finding some decent dip demand at 140.00 still.

I remain GBP bearish overall and continue to rally-sell as my preferred strategy amid all the uncertainty/indecision including Brexit. No change to this view per my comments above but a little caution advised after this week's extensive moves.

Meanwhile EURUSD continues to find itself tightly bound amid all the EUR/cross activity and inherent Euro demand but has now cleared out the decent support between 1.1175-80. Large option expiry interest there today though should help provide further support and we should continue to see good two-way business.

USDJPY has traded tightly again amid the USD and risk uncertainty but has failed at 110.00 again with large expiry interest of its own there today. Definitely a case of rinse and repeat still for now. USDCHF also remains tightly bound amid the general CHF demand with EURCHF also clinging to recent lows  with the SNB watching closely still.

AUDUSD has failed to rally with any conviction amid the US-China trade concerns/expected RBA rate cut scenario but currently finding some demand at 0.6880 while USDCAD is looking underpinned still helped by CAD/JPY supply but similarly finding it hard to make much progress higher.

Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.

Have a good day/week-end out there one and all.

Interbank Rate 08.22

GBPUSD   1.2782

EURUSD   1.1176

EURGBP   0.8743

GBPEUR   1.1435

GBPAUD   1.8560

GBPCAD   1.7211

GBPZAR   18.3101

GBPHKD   9.9138

USDJPY   109.68

USDZAR   14.3252

EURJPY   122.58

EURHKD   8.6697

GBPJPY   140.17

AUDUSD   0.6886

EURCHF   1.1278

USDCAD   1.3466

USDCHF   1.0090