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The GBP/USD pair regained positive traction on the first day of a new trading week and retested multi-year tops, around the 1.3755-60 region during the early European session. Diminishing odds for a Bank of England (BoE) rate cut was seen as a key factor that benefitted the GBP while the UK Manufacturing PMI was finalized at 54.1 for January and remained supportive. The single currency starts the week on the defensive vs. the greenback following two consecutive sessions with gains as the EUR/USD pair extends the rangebound trading above 1.2100.The dollar edged higher in early European trading Monday, with traders starting a fresh week in a cautious vein given last week’s turmoil in the equity markets. The dollar index was up 0.1% at 90.575. USD/JPY rose 0.1% at 104.72 while the risk-sensitive AUD/USD rose 0.2% at 0.7659.

GBP/USD meets fresh supply as US dollar recovers further ground, knock-off  further towards the 1.3650 level. European vaccine row and Wall Street meme frenzy spook investors. EUR/USD showed a little reaction to the encouraging German growth numbers, as the sentiment remains tepid amid the recent Wall Street frenzy. The major was last seen trading at 1.2117, modestly flat on the day. Focus shifts to the US macro news and sentiment around US stocks. The dollar pushed higher in early European trading Friday, with the safe haven in demand as risk sentiment takes a hit on the back of turmoil in equity markets. The dollar index was up 0.3% at 90.690, adding on to Wednesday’s 0.6% gain.  USD/JPY rose 0.3% at 104.50, while the risk-sensitive AUD/USD dropped 0.3% at 0.7656.

FX MARKET REPORT 30.01.2021 SAT

GBP/USD is consolidating the downside below 1.3700 following the FOMC decision-led decline to near the 1.3650 region. EUR/GBP gained some traction on Thursday and recovered further from multi-month lows. The imposition of fresh COVID restrictions in the UK continued weighing on the British pound. ECB jawboning on the euro strength might keep a lid on any meaningful gains for the cross. EUR/USD came under downside pressure yesterday. It has eroded the 55 day ma and attention has dropped to 1.2014 the September high and the 1.2003 2020-2021 uptrend, which we suspect will hold.  The Fed maintained the status-quo and noted that the economic recovery hinges on the COVID situation and vaccine progress. Meanwhile, Fed Chair Powell refrained from commenting on tapering while markets solid-off risk and bid up the safe-haven US dollar. The main equity indices on Wall Street saw their biggest one-day percentage drops in three months during the previous session, as hedge funds liquidated positions to raise liquidity after suffering losses on short positions in other stocks, amid highly speculative retail buying. This helped boost safe-haven demand for the U.S. currency.

GBP/USD seesaws around 1.3730 after refreshing the 32-month high during early Wednesday. The quote initially cheered the market’s optimism surrounding the coronavirus (COVID-19) vaccine and the US dollar weakness before allowing the bulls to catch a breather amid virus woes in the UK and wait for the key Federal Reserve meeting. GBP/USD's immediate technical bias remains bullish, as the higher lows and higher highs setup on the daily chart is still intact. The GBP/EUR has tested the 1.13 level several times recently, whilst EUR/USD is trying hard to extend Tuesday’s bounce above 1.2150 but in vain, as the bulls remain nervous in the run-up to the Fed showdown. The Fed is likely to strike a dovish tone, which could further weigh down on the greenback.  The broader market risk sentiment and the US stimulus headlines might influence the USD price dynamics. In the meantime, the release of US Durable Goods Orders will be looked upon for some short-term trading opportunities later during the early North American session. The dollar index was up 0.05% at 90.188, against Japanese Yen, the dollar was up 0.12%, trading around 103.7, recovering from a dip to 103.58. The Fed may is set to comment on recent economic weakness, as well as prospects for a better second-half of the year. Jerome Powell, Chairman of the Federal Reserve, may be asked about froth in stock markets.

The GBP/USD pair remained depressed below mid-1.3600s, or near multi-day lows and had a rather muted reaction to upbeat UK employment details. The number of people claiming jobless benefits rose by 7K in December, against expectations +35K and 38.1K seen previously. The downbeat market mood benefitted the safe-haven USD and exerted pressure on GBP/USD. EUR/USD sees a V-shaped reversal just above the 1.2100 level. Risk tone recovery alongside the European equities, downs the USD. US CB Consumer Confidence data and stimulus updates in focus. The dollar index was up 0.2% at 90.547. USD/JPY was down 0.1% at 103.78, GBP/USD fell 0.4% to 1.3620, while the risk-sensitive AUD/USD was down 0.4% at 0.7675.

GBP/USD surrenders intraday gains, flirts with session lows near 1.3670 area. GBP/USD struggled to preserve early gains and retreated around 50 pips from tops. Concerns about the economic impact of COVID-19 held bulls from placing fresh bets. A modest pickup in the USD demand exerted some additional pressure on the major. The recent close above 1.3712 on a daily chart closing basis pushes the 1.3836 February 2016 low to the fore. Longer term the 2018 peak at 1.4377 is being targeted. Currently while dips hold over 1.3520, the market is remains bid. Below 1.3520 would alleviate immediate upside pressure for losses to the 1.3350 late December low, there is scope for the 1.3251 7 month uptrend. Currently, the Elliott wave count is implying a slide to 1.3400/1.3530. EUR/USD last week sold off to and bounced off the 55-day ma at 1.2086. It is possible that this was an ‘a -b-c’ correction lower that has completed and we will have to neutralise, as it is possible that the markets next move will be on the topside. The Dollar Index was down 0.1% at 90.085, having fallen 0.7% in the last week. USD/JPY was down 0.1% at 103.71, while the risk-sensitive AUD/USD was up 0.3% at 0.7738.

UK Manufacturing PMI misses estimates with 52.9 in Jan. Services PMI in  the UK contracts to 38.8 in Jan, a big miss. GBP/USD sees fresh supply  and hits daily lows near 1.3660. Eurozone Manufacturing PMI arrives at  54.7 in Jan vs. 54.6 expected. Bloc’s Services PMI stands at 45.0 in Jan  vs. 45.0 expected. The shared currency extends gains fuelled by the  German PMI readings, with EUR/USD fast  approaching the 1.2200 level.  The spot trades at 1.2187, up 0.18% on the day. Dollar Index was up 0.1%  at 90.243, but has dropped 0.6% this week. Some resistance awaits at  1.3680, which capped the pair in early January. It is followed by  1.3745, the previous 2021 peak. Support is at 1.3620, which was a  stepping stone on the way up, followed by 1.3525, a cushion seen last  week. USD/JPY was up 0.2% at 103.66 while AUD/USD was down 0.5% at  0.7728.

GBP/USD caught aggressive fresh bids for the third consecutive session  on Thursday. The upbeat market mood undermined the safe-haven USD and  remained supportive. Sustained move beyond the 1.3700-1.3710 area has  set the stage for additional gains. EUR/USD regains upside traction  above the 1.2100 mark. Risk appetite continues to favour the single  currency. ECB’s interest rate decision due later in the session. EUR/USD  reverses Wednesday’s pullback and improves above the 1.2100 barrier on  the back of the renewed selling pressure hurting the greenback. The  reflation trade is back to the markets and sustain the fresh improvement  in the risk complex, particularly following Biden’s inauguration and  his plans to boost fiscal spending by around $1.9 trillion. Dollar  Index, which tracks the greenback against a basket of six other  currencies, was down 0.2% at 90.297, declining for a third day since  touching a near one-month high on Monday. USD/JPY was down 0.1% at  103.41, after the Bank of Japan kept monetary policy unchanged earlier  Thursday while revising up its economic forecast for next fiscal year.  Biden was sworn in as the 46th president of the United States on  Wednesday, and traders are seeing the change in administration as  increasing the chances of increased stimulus given the incoming  president has already proposed a $1.9 trillion Covid-19 relief bill. The  dollar started the year on a firmer footing as U.S. Treasury yields  rose on the back of expected greater borrowing to fund additional  stimulus.

The sentiment around the pound remains buoyed by the upbeat UK CPI  figures, with GBP/USD holding the higher ground near 1.3670 levels. The  major adds 0.28% on a daily basis. The UK Consumer Prices Index (CPI)  12-month rate came in at +0.6% in December when compared to +0.3% booked  in November while beating expectations of a +0.5% print. EUR/USD has  been advancing after US Treasury Secretary nominee Yellen made the case  for more stimulus. President-elect Joe Biden is inaugurated later in the  day and his first actions in office are set to boost bulls, outweighing  ECB worries. The European Central Bank is set to leave rates unchanged  but may warn about the higher exchange rate of the euro. Without cutting  rates, any attempt by the ECB to talk down the common currency will  likely be futile. However, Bloomberg reported that the ECB could launch a  strategy of controlling yield spreads. While lowering returns on  European debt may weigh on the euro, it would lower borrowing costs for  some governments, a positive development. Dollar Index, which tracks the  greenback against a basket of six other currencies, was down 0.2% at  90.278. USD/JPY was down 0.1% at 103.75, ahead of the Bank of Japan’s  latest rate-setting meeting on Thursday. AUD/USD was up 0.6% at 0.7736.