Mike Paterson’s daily Forex brief
Wow, quite an eventful day what with Our ‘Arry being found innocent of tax evasion and Fabio Capello, rightly or wrongly, making a two-digit gesture to the FA while the jury on the FX markets is still also firmly out on what the BOE and ECB may do in a few hours time.
As if suddenly remembering that the Old Lady is likely to add to at least another Â£50 billion of QE today, and some are suggesting Â£75 billion, we saw a good amount of selling England by the Pound as first GBPUSD baulked at that 1.5925/35 area I mentioned yesterday and then a UK clearer bought a chunk of EURGBP to take it through the strong resistance at 0.8350 (GBPEUR 1.1976).
We saw highs of 1.5929 before the fall and overnight came as low as 1.5791 before finding a little support. EURGBP didn’t need much convincing to go higher once 0.8350 was breached and we’ve been up to 0.8403 (1.1900) just shy of the 0.8410 (1.1890) initial target.
Elsewhere GBPCHF has fallen despite more Swiss Franc selling, while GBPAUD is languishing near 30 lows around 1.4650 despite a fair deal of Aussie $ selling, particularly versus the consolidating Euro.
Of course, should the BOE only ease by Â£50 billion or indeed less, or for that matter leave unchanged, and then we can expect to see a rapid reversal of these GBP losses such is the fickle/nervous state of these markets right now. Ahead of the 12.00 GMT announcement we have the not inconsiderable matter of UK Trade Balance and other data at 09.30 GMT.
The Greek debt deal seems as far away as ever, despite some positive rhetoric, but the Euro is finding decent support as traders are already oversold and getting squeezed on this rally. We saw good two-way business on EURUSD yesterday with a dip to 1.3215 after failing to break higher than yesterday’s early levels above 1.3250, but good name buyers returned and first thing this morning we breached the big 1.3300 level I discussed and had the usual quick flurry higher before capping out.
Dealers in the Euro will be trying to keep their powder dry ahead of the ECB rate decision today at 12.45 GMT and the all important press conference that follows. Jury’s out on whether they will cut by 0.25% with latest forecast polls giving a 50-50 split.
Whatever transpires we’re guaranteed a day of thrills-n-spills to match any of that out there in football land right now.
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