APAC Session: Mayday sends GBP lower in Asia

GBP has been the notable mover in the G10 FX space today, finishing nearly 100 points lower into London’s open.

GBP has suffered today after opening at 1.2270 this morning in Asia. Falling against both the USD and the EUR throughout the session. The sell-off accelerated at GBPUSD broke 1.2200 and EURGBP moved up through 0.8600 with stop-losses being triggered in both.

PM Theresa May’s answers to the UK’s Brexit strategy over the weekend in the press have not been well received. Increasing worries the behind the scenes the UK Government doesn’t really have one. The executive summary seemed to read something like, “we want full control of our borders and laws and also full access to the European markets for our companies, they’re all all mutually exclusive.” A quite optimistic opening gambit by the UK in this simple Kiwi’s eyes. Good luck with that Mrs May….

Following on from Fridays so so Non-Farm’s, but excellent hourly earnings in the USA, the inflationista’s have sent US Yields a bit higher today and German yields have also risen.  GERMANY’S 10-YEAR GOVT BOND YIELD RISES TO THREE-WEEK HIGH AT 0.318 PCT – source  TRADEWEB . None of this is good news for GBP.

More stories about increased pension liabilities in the private sector and spiralling decommissioning costs in the North Sea all meant GBP had few friends today.

EUR/GBP

The rally in EURGBP  to 0.8655 is perhaps especially significant. There were clearly stop losses as 0.8600 was breached but much mort notable is the  100-day moving average at 0.8630 that has also now broken. EURGBP has been locked between its 100 and  200-day moving averages since early November. A close above  0.8630 implies a move to 0.8700+ initially.

Resistance is at 0.8670 initially and then 0.8710. Intraday support lies at 0.8630 now and then 0.8575.

EURGBP Daily

GBP/USD

GBP/USD will close around 100 points lower on the day in Asia.  Stop-loss selling was seen as 1.2200 broke with support at 1.2193 fairing no better. This now becomes resistance intra-day with the next resistance at 1.2430 the previous two day’s highs.

Support is at 1.2160 the days low and then 1.2070 the post-flash-crash lows.

GBPUSDDaily

Elsewhere, things were much more dull with Equities the notable winners on the day. Following the US lead from Friday the ASX was up 0.62%, Japan 0.46%, Singapore up 0.52% and Hong Kong 0.44%.

 

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Jeffrey Halley

Jeffrey Halley

Senior Currency Analyst
Based in Singapore, Jeffrey has over 25 years experience in the financial markets, having traded currencies, options, precious metals and futures. Jeffrey started his career at Barclays Bank in New Zealand. However he has spent most of it in London and Asia.Jeffrey focuses on the Asia time zone across asset classes. A regular commentator on business news TV and Radio, he is originally from New Zealand and holds an MBA from Cass Business School, London.