GBP/USD[1] FUNDAMENTAL HIGHLIGHTS:
- EUR/GBP[2] Range Break Nearing
- GBP[3]/USD[4] Seasonality Signals Strong April Ahead
- GBP/JPY[5] Upside Risks Amid Month/Quarter-End Flows
A relatively constructive close to the week for the Pound with cable trading at within close vicinity to the 1.38 handle. The slew of UK data throughout the week has had a somewhat limited impact on price action. Softer CPI is likely to reverse higher in the months ahead, which has been well-documented, strong UK flash PMIs for March was not entirely surprising given the UK’s roadmap to normalisation being laid out, while retail sales are also expected to bounce strongly as non-essential retail re-opens. That said, for much of this and for the first half of next week the focus has and will be on month/quarter end flows for G10 FX.
EUR/GBP Range Break Nearing
The modest bid in cable has been in part a by-product of some cross-related EUR[6]/GBP selling with the 0.8540-0.8640 remaining well respected. In turn, with the cross yet again rejecting the range top, to trade at range lows, focus will be on whether we can finally see a clean break next week. The fundamentals continue to signal that EUR/GBP remains tilted to the downside with Europe heading towards a third Covid wave with most of the region extending restrictive measures, while the UK have set the roadmap for normalisation.
EUR/GBP Chart: Daily Time Frame
Source: Refinitiv
Although, I must admit until yesterday, I had been cautious on expecting further downside in recent weeks, given that the cross had been in oversold territory, while the RSI had also posted a bullish divergence. However, with the RSI failing at 50 and the now out of oversold conditions, there is more room to
