No Relief For GBP As We Grind Lower Again
Sentiment on the Pound has been firmly entrenched by the heightened risks of a no deal Brexit, with comments this weekend from Liam Fox, the Trade Sec still reverberating through the market. As such, the market is paying little attention to the data ahead of us, with Q2 GDP out tomorrow and expected to show a pick up after a disappointing first quarter.
Despite this, it is not expected that any good news from this - if there is any - will have a material impact on the Pound. The market has made its mind up over the likelihood over the outcome and GBP sales have been going through as a hedge against this as much as it has been speculative.
EUR/GBP remains bid as a result, with the cross rate still showing intent on testing and pushing the limits at 0.9035-40. We have noted some intraday demand at 0.9000, and buyers are not letting go of this so we will need some positive news to negate this interest, though looks unlikely.
Cable is now testing down into the buying zone we highlighted at the start of the week at 1.2800-50. Longer-term buyers are seen here, though bids are being chewed through as I write and there is every chance (at this point) that we could test levels at 1.2810 and 1.2775-70. A breach of the latter puts 1.2600 and 1.2500 in the line of fire, but this would be a major extension at this stage.