We are rather light on activity today and with the US on holiday much of the fundamental activity will be cleared before mid-morning. That will likely leave us headline watching and keeping an eye on major levels in currency pairs. The biggest mover on Friday was GBP, Brexit progress was the primary driver as once again hope begin to rise that the EU and the UK will eventually find some middle ground and soften the impact of Brexit.
Progress on Irish boarder talks currently seem to carry the most weight, while over the weekend Japanese PM Abe suggested he would welcome the UK into pacific trade agreements. The result was a GBPUSD rally of almost 1.5% from Thursday’s low to last night’s open, testing 1.3130 but this morning some USD demand has GBPUSD sitting just above 1.3050. EURGBP dropped almost 1.8% through the first week of October, the euro losing out to the pounds Brexit progress.
Looking at the major levels and first resistance on GBPUSD will sit at the week’s open and high at 1.3130 with some moderate support towards the 1.3030 area, but firmer below at 1.2922 which marks last week’s lows.
EURUSD is back below 1.1500 and with USD 10 year rates rising to 3.23 on Friday the prospect of a longer term string USD increases, especially as US yields continue to widen the gap vs their peers. 1.1462 offers some light support to EURUSD downside while 1.1530/50 area is the resistance area where we can expected EUR sellers to halt any rally for now.
EURGBP finding light support towards the .8775 area, with .8868 now liking like resistance which would attract on any bounce higher.