GBP the only mover today - what levels to look out for
Earlier today we got the April GDP figures, which showed a 0.4% contraction off the back of poor manufacturing numbers impacted by Brexit uncertainty - car makers shutting down that month. This saw industrial production falling 2.7%, with manufacturing down 0.8%. The trade figures were better than expected on the face of it, though this was largely down to a fall in imports, which may show up in following consumer data going forward.
As a result, GBP has been the only focal point for today and with the likelihood of a hard line Brexiteer taking over at No 10, the combination of negative factors are building up again as Brexit continues to darken UK prospects going forward.
Cable ended last week testing the upper 1.2700's, where 1.2800+ was firmly rejected some weeks ago and highlights a key resistance point from current levels. This puts the focus back on the downside where initial support comes in at 1.2625-50, and a move below here and 1.2600 may well put stronger levels in the 1.2550-1.2450 area into the picture.
For EUR/GBP, we are already trying to grind a path through the 0.8910-40 area, and through here, the immediate target would be 0.9000. 0.9100 is also a major level, though to get to these levels, one suspects we would need to see greater risks of a no deal Brexit, which have clearly seen the odds rise as Theresa May and her withdrawal deal are now gone.
We get more UK data tomorrow in the form of the latest employment report, and any further weakness here may well see the lower GBP levels tested again.