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As noted, UK is low hanging fruit for a trade deal… EU will be a tougher negotiation
GBP
Sterling Rises After BOE Repeats Guidance For Gradual Rate Cuts
Sterling rises after the Bank of England delivered a widely-expected 25 basis points interest-rate cut but maintained its guidance for gradual policy easing. The BOE voted 5-4 to cut rates to 4.25%. Two members preferred to cut rates by 50bp while two favoured leaving rates unchanged. The BOE reiterated that a “gradual and careful approach” to further rate cuts remains appropriate. Many analysts had expected an 8-1 vote for a 25bp cut with one backing a 50bp move. There was also speculation the BOE could drop its reference to gradual cuts. Sterling rises to $1.3325 after the decision from $1.3251 beforehand. The euro falls to 0.8479 pounds from 0.8514.
BOE rate cut as expected… GBP firms despite 2 voting for a larget rate cut
ING Comments on Euro & Sterling
EURUSDÂ has drifted lower and is testing support at 1.1300 on Thursday, said ING.
The bank has been saying that the US dollar bounce has been lackluster, but positioning probably means that a move under 1.1250/1260 Thursday could do some damage.
Thursday’s Bank of England policy meeting should be a market mover, stated ING. With a 25bps rate cut to 4.25% widely expected, probably the most important development Thursday will be what the BoE does with this sentence: “Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate.” Those more dovish in the market are looking for “gradual and careful” to be dropped/amended to signal a sharper set of BoE rate cuts. ING isn’t so sure the BoE is ready to drop that phrase just yet.
Given that the market is now pricing four 25bps rate cuts this year and ING expects three — in May, August and November — if BoE easing remains “gradual and careful,” sterling could rally, wrote the bank in a note. For reference, the foreign exchange options market prices an 80 USD pip break-even range for GBPUSD over the next day.
For EURGBP, that break-even is 39 GBP pips.
GBPUSD could get distorted by global risk sentiment on Thursday, but the bank would say a less dovish than expected BoE Thursday could drive EURGBP to the 0.8435/40 area.
US OPEN
Stocks gain and DXY tops 100.00 ahead of Trump’s UK-US trade announcement; BoE due
Good morning USA traders, hope your day is off to a great start!
Here are the top 4 things you need to know for today’s market.
4 Things You Need to Know
Equities complex broadly positive in anticipation of US President Trump’s deal announcement; NQ +1.3%.
DXY back above 100, EUR/USD slips onto a 1.12 handle, GBP eyes UK-US trade deal and BoE.
Gilts edge higher into the BoE and Trump’s announcement, USTs & Bunds slip slightly.
USD pickup weighs on gold whilst crude remains focused on geopolitical developments.
US500 – SP500 4 HOUR CHART -What is AT showing
You have seen me use AT (The Amazing Trader) for my charts.. not only are its levels are amazing but the patterns they form are even more invaluable for trading. As I pointed out ahead of the fact ..
5575 = key support… bounced off it yesterday for a double bottom
5700 now at risk… above it would target 5727 and 5787 as next key levels
Keeps a bid while above 5645-65
Once again, reaction to news is more important than the news itself
AT = The Amazing Trader (see link is in the top menu bar for a 30 day trial)
USDJPY 4 HOUR CHART – What is AT showing
Correlating with risk on mood today
Key resistance is clear: 145.08 ahead of 145.92 (although 145 is most important in this fresh run to the upside_
Keeps a bid while above 144.27…and focus is on 145+ while above 143.43
AT = The Amazing Trader (see link is in the top menu bar for a 30 day trial)
AUDUSD 4 HOUR CHART – WHAT IS AT SHOWING?
Failure above .6500 followed by the break/close below 6434 ends the latest episode/leg to the upside
Not much below it so watch 6434 as below it exposes a deeper move down but only above .6515 would revive the uptrend.
AT = The Amazing Trader (see link is in the top menu bar for a 30 day trial)
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