GBPUSD is up 0.55% at the time of writing having made a 100-pip spike higher on news that the UK government is making plans towards lock down restrictions being lifted. The market also received quite good news from the Office for National Statistics which showed CHAPS payments at 75% of pre-covid levels this time last year, showing a sign of economic normality already returning.
The Bank of England MPC member Saunders reiterated today that the BOE has a range of tools still available to help the economic recovery whilst we wait for employment levels to return to pre-pandemic levels. A lower bank rate “would be the most appropriate tool”.
Today’s price action has not been able to take out the weeks high, but with the US traders coming in soon and a weakening US dollar, the 1.4000 big figure level is still looking like a possibility today.
The EURGBP could move higher if the market favours the euro, which would be detrimental to the possibility of much more bullishness in Cable, but the price action in the EURGBP remains in a downtrend currently with 0.8500 still a potential monthly target should the UK get the vaccine rollout and economy open quicker than the larger Euro zone can. Trader sentiment in the EURGBP on the ActivTrader platform shows that 84% of traders are bullish the pair.
ECB minutes headlines were that monetary policy support remains essential and that they are monitoring the debt markets as there have been rises in ‘nominal risk-free rates’. Early signs in the EURUSD and single currency crosses were showing bullishness on these comments of keeping to the accommodative monetary policies.
There is a swing low market structure in the EURUSD which could act as resistance around the 1.208 – 1.2100 zone so I will be monitoring this area for any signs of a reversal there. And also keeping one eye on the US dollar index to see if today’s European trend of selling the US dollar continues into the US session. We have arrived on the US dollar index at the market structure I mentioned this morning, which was resistance and could now act as support around the $90.50 – $90.60 area.
The AUDUSD has benefited from the US dollar decline and also a mixed labour report and an encouraging jobless rate. The Aussie could test the 2021 high prices between 0.7800 and 0.7820 which have been tested a few times already this year. A pop above could be quite explosive as there is bound to be a number of Buy Stops sat in these areas.