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Pound Rallies Ahead of May Day15 January 2019 by Dave Evans

Morning Report: 07.00 London

The British pound is relatively strong ahead of today’s parliamentary vote on Theresa May’s Brexit proposals. The bill is widely expected to fail, but the key question is the degree to which this has already been priced into current prices. The other competing driver right now is the Bank of England’s fairly clear steer on interest rates and the two increases expected this year.

The EUR/GBP is lower for the fourth straight day as the pound gains ground against the euro. The GBP/USD is rallying this morning for the third straight day to challenge support at 1.2900. The GBP/JPY has recovered the 2019 opening gap to challenge the 140 level.

Overall, the yen is softer, helping yen pairs to make gains, with the USD/JPY on the rise and hitting its highest levels for the week. The AUD/JPY continues to climb, pushing through the 78.00 support level. The EUR/JPY is also rallying though is lagging other yen pairs.

The dollar index is on the soft side, allowing the dollar pairs to rally. The AUD/USD has rallied for the eight day out of the last nine, while the EUR/USD continues to lag.

The USD/CAD is on the back foot as the Canadian dollar continues to hold ground against the US dollar despite oil prices taking another dip.

The USD/CHF remains depressed, with the Swissy losing ground this morning.

Coming up today

The Brexit vote will take place at some point today and dominate local currency moves.

At 13.30, we have US PPI.

Following this, we have ECB President Draghi speaking at 15.00.

FOMC member George speaks at 18.00.

Australian Westpac Consumer Sentiment is at 23.30.

Trade Idea

The Australian dollar remains strong, while the euro is struggling to make progress in the face of economic concerns. As such, the EUR/AUD has retreated further from the New Year’s spike.

Pound Rallies Ahead of May Day

Further downside could be on the cards and a good way to play this is a LOWER trade predicting that the EUR/AUD will close below 1.5800 within 14 days for a potential return of 170%.

Pound Rallies Ahead of May Day