On a day like yesterday markets can seem quite insignificant. Our thoughts and prayers go out to all those involved or effected by the terror attack in London yesterday. Whether it’s a sign of our times or simply the style of the cowardly attack but there was almost no impact whatsoever in markets as details of the attack emerged. GBP was already under pressure on the day and weakened very slightly as the headlines first started to emerge but then rallied back higher to close the day more or less flat. The FTSE traded lower but it was already well in the red before news of the attack broke.
Sentiment was subdued for much during the day, carrying in the weaker theme to the week, in Europe stocks closed down towards two week lows while this morning they have opened more or less flat. In the US stocks ended the day mixed, a choppy session for most, as major bourses showed little direction or conviction ahead of today’s Healthcare bill in front of congress. The USD was marginally lower on the day, as was the Euro. The AUD has faced selling thus far this week and the slide shows little sign of stopping, and while JPY was slightly firmer yesterday, one gets the feeling that markets are looking to see if Trump can get his healthcare bill through, before deciding on what direction we should take.
Looking towards GBP and the pound continues to trade just below 4 week highs against the USD, a selloff through much of yesterday ran into buyers at almost every level lower, before rallying into the evening to close the day flat. GBPUSD traded towards 1.2518 this morning, while overnight EURGBP managed to break below the .8660/50 area and made quick progress towards .8630. We’ve been highlighting that we need to see a break below .8620 area if the bears are to hope to gain any more control here and focus will likely be towards retails sales figures due this morning. .8590 is next support should we see that breakdown, otherwise EURGBP is likely to drift back towards .8700. GBPUSD finds support below towards 1.2425 for now while 1.2570 attracts above. Markets have shifted to short sentiment on GBP pairs yet they remain around highs and thus we may well get one more press higher for the pound before Brexit sentiment kicks back in and weighs once more.
EURUSD has made several attempts higher above 1.0800, however keeps falling short of major resistance around 1.0830 which is being defended in the market. A break above there will likely see 1.0880/90 achieved quite quickly as stops are triggered and there is an area I feel would provide an opportune time for Euro sellers to take advantage. The USD outlook is likely dependent on today’s healthcare bill, concerns Trump will not be able to get his bills passed in the house. Yellen also is due across the wires as well as jobless claims so the greenback may well find some support into the afternoon session.