Softer risk sentiment greets a new week

Monday 26 October 2020

Rising COVID cases in Europe and the US and the ongoing uncertainty going into the US election next Tuesday have seen another knock in risk sentiment with oil and equities opening the week on the back foot. USD demand generally prevailing also but everything in a state of flux still.

Lots of Brexit headlines over the week-end and GBP remains in a whirl as trade deal talks continue this week. Fickle forex msrkets as ever and lots of option contract interest in the mix to keep things interesting too.

GBPUSD failed around 1.3120-25 again and we've seen good two-way business with a retreat to 1.2993 this morning but equally a rally to 1.3040 s I type. EURGBP based at 0.9030 ahead of some large 0.9020-25 bids and today sees over 3bln expiries between 0.9000-20 to confirm the demand down there I've been highlighting for a while.Offers now at 0.9100 again then more at the pivotal 0.9120-25 area still (2.3bln expiries) then 0.8985, 0.8965 and 0.8950 with more at 0.8935, 0.8920 and 0.8900. I remain a dip buyer overall especially with the usual month-end demand in play but respecting the current two-way business.GBPJPY found a cap above 137.30 again but holding 136.30 on the retreatso far with risk turning up a little as I type.

No change in my basic view and I stay poised to sell GBP rallies as my preferred side and buy back in the dips as ever. Patience continues to be a virtue and entry level key as always. I still see dip demand though with markets and risk sentiment still in a state of uncertainty overall.Brexit remains the very big elephant in the room.

USDJPY held 104.50-55 again but we've also failed into 105.00 once more. EURJPY found a cap at 124.20 this morning amid the softer risk and now in retrest through 124.00 on some general EUR supply as I type.EURUSD has capped at 1.1860 again amid the firmer USD tones and general EUR supply, after strong gains on Friday, and now posting lows of 1.1813 after some softer IFO data this morning. USDCHF has based at 0.9030 and now testing 0.9080 again as EURUSD retreats with EURCHF also falling but SNB casting its shadow still.

AUDUSD duly ran into decent sell interest at 0.7150 but holding 0.7080 and now 0.7100 on the retreat as we rally back above 0.7130. USDCAD has seen another rally from 1.3120 amid the firmer USD/softer oil tones and now testing 1.3180 as I type.

Markets are ever-fickle so don't forget to contact me if there's areas that you might need some further help with.

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

Interbank rates: 08.16 GMT

GBPUSD 1.3003

EURUSD 1.1824

EURGBP 0.9088

GBPEUR 1.0902

GBPAUD 1.8278

GBPCAD 1.7143

GBPJPY 136.40

GBPZAR 21.2057

GBPHKD 10.0905