British Pound Holds Ground as Risk Aversion Grips Markets Ahead of Fed Action. Will GBP/USD Break?

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British Pound. GBP/USD, EUR/GBP US Dollar, Crude Oil, Fed, Nasdaq – Talking Points

  • The British Pound has evaded the chaos engulfing markets right this moment
  • Tech wreck issues develop after Netflix contagion spreads past Nasdaq
  • All eyes on the Fed for tightening tempo. Wunwell USD demand see GBP/USD decrease?

The British Pound is regular towards the US Dollar, nevertheless it has made a 2-year excessive towards the Euro. EUR/GBP traded as little as 0.8305, nearing the December 2019 low of 0.8277.

Risk aversion continued on from the US session and into APAC equities right this moment as issues over central financial institution tightening weighed on investor sentiment.

Geopolitical dangers look like on the rise with US President Joe Biden once more warning {that a} Russian invasion of the Ukraine would have critical penalties.

Netflix reported after the shut and confirmed an enormous drop in subscriber projections for the primary quarter. That noticed the inventory tumble 20% within the aftermarket. This appeared to feed into broad tech inventory declines.

The Nasdaq money market closed down 1.3%. It has continued the slide within the futures market in Asia, down over 1% because the shut in New York. The broader indices have additionally been dragged down.

Japanese equities have been greater than 1 % decrease whereas Australia’s ASX 200 was down greater than 2%.

Not surprisingly on this market, excessive beta commodity associated currencies have been crunched whereas haven currencies are discovering assist.

In this atmosphere, the AUD is the worst performer, joined by NZD and CAD. The finest performing foreign money is JPY adopted by CHF, EUR then USD.

As traders head to the hills, debt markets are being type after. Treasuries are being hoovered, pushing down 10-year yields to 1.77%, properly beneath 1.90% seen on Wednesday.

Similarly, Australian authorities 10-years are at 1.89%, down from 2.02%. The UK’s 10-year Gilts are solely 8 foundation factors from their peak at 1.30% to be at 1.22%.

Commodities have additionally been hit, WTI crude oil has visited a low of $82.78 bbl right this moment, down from yesterday’s excessive of $87.10. All different vitality commodities are typically decrease.

Somewhat towards the grain, industrial metals are holding onto current features for now. Gold and silver are additionally doing properly right this moment.

GBP/USD Technical Analysis

GBP/USD seems to be consolidating between the 100 and 200-day easy transferring commons (SMA) for now, at present at 1.3541 and 1.3731 respectively. These ranges may present assist and resistance.

Support may additionally be on the earlier lows 1.3573, 1.3431 and 1.3161 or the pivot level at 1.3375.

Resistance might be on the earlier highs of 1.3749, 1.3834 and 1.3913.

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for

To contact Daniel, use the feedback part beneath or @DanMcCathyFX on Twitter

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