The GBP/USD opened in Asia around 1.9690 in Asia after moving higher on broad USD weakness in the wake of much weaker than expected US new home sales and heavy demand for JPY-funded carry trades by US funds. The GBP/USD moved up to 1.9705 in early Tokyo on the back of GBP/JPY demand, but good selling interest by UK clearers capped and sent it lower.
The GBP/USD eased to 1.9672 before settling between 1.9680/90 for the balance of the quiet session. The GBP/JPY broke above yesterday's 232.70 high to 233.00 at one stage before Japanese profit taking pushed the cross back to 232.70. The EUR/GBP was a non-event in Asia and stayed trapped in a 0.6765/73 range. The GBP/USD is getting support form divergent shifts in BOE and Fed expectations.
The recent run of strong UK data has revived expectations for another BOE rate hike in the next few months while the weak US new home sales data yesterday put the chance of a Fed cut at some stage back on the table. There is stiff resistance in the GBP/USD between 1.9720/50 as it has topped out in that window nine times since Jan 25. Hourly support is found at 1.9660.
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