FRANCE DATA: Bank of France See Q1 GDP At 0.2-0.3% Q/Q, Now With Downside Risk

Gilt futures traded comfortably through the lower bound of indications provided by desks at the open, before a recovery from session lows.

• Contract last -25 at 90.40 from lows of 90.21, sticking comfortably within the range established over the prior 2 sessions.
• The short-term technical outlook in the contract remains bearish. Thursday’s fresh cycle low deepened that theme, before the dovish hold from the BoE provided support
• Next key support is located at the November 19 ’25 low (89.86), while bulls need to force a break above the 20-day EMA (91.20).
• Yields 2.5-3.5bp higher, curve steeper.
• In domestic politics UK PM Starmer’s future remains in doubt, with increasing pressure on the PM from within his own party and his chief of staff stepping down after he advised the PM to appoint Mandelson as ambassador to the U.S. Reports have suggested that Starmer may look to appoint MPs from the left of the party to his cabinet.
• 10- & 30-Year swap spreads are off last week’s lows but continue to indicate increased political and fiscal premia as odds of a leadership challenge within the Labour Party have risen.
• Pressure in Tsys (following a report suggesting that China is telling institutions to rein in their holdings) and JGBs (in the wake of the Japanese election results) provide some pressure from further afield.
• BoE MPC member Mann (who is closer to voting for a cut then she was previously, based on communique surrounding last week’s BoE decision) is due to speak later today (19:30 London). Note that she will speak on ‘the dollar and continued US exceptionalism’, so we may not get much on UK monetary policy.

• RES 4: 1.2081 High Jan 27 and key resistance   
• RES 3: 1.2045 High Jan 28  
• RES 2: 1.1975 High Jan 30 
• RES 1: 1.1896 Low Jan 28
• PRICE: 1.1852 @ 08:29 GMT Feb 9
• SUP 1: 1.1766 Intraday low
• SUP 2: 1.1739 50-day EMA
• SUP 3: 1.1693 76.4% retracement of the Jan 19 -0 27 bull leg 
• SUP 4: 1.1670 Low Jan 22  

A corrective bearish cycle in EURUSD remains intact. Note that moving average studies are in a bull-mode position and this continues to suggest - for now - that the latest retracement is likely a correction. Support to watch is at the 50-day EMA, at 1.1739. A clear breach of this 50-day average would suggest scope for a deeper pullback. Initial firm resistance is at 1.1896, the Jan 28 low.        

• RES 4: 7080.92 0.764 proj of the Nov 21 - Dec 11 - 18 price swing    
• RES 3: 7061.44 2.0% Upper Bollinger Band
• RES 2: 7043.00 High Jan 28 and bull trigger  
• RES 1: 7025.46 1.0% 10-dma envelope
• PRICE: 6964.00 @ 08:14 GMT Feb 9
• SUP 1: 6944.71 20-day EMA
• SUP 2: 6733.00 Low Nov 25 ‘25
• SUP 3: 6691.56 76.4% retracement of the Nov 21 - Jan 28 bull leg
• SUP 4: 6583.00 Low Nov 211 and a key medium-term support 

A short-term bearish theme in S&P E-Minis resulted in a break last week of 6814.50, the Jan 21 low and a bear trigger. This proved short-lived, however, with prices rising swiftly back above to begin this week. Note this puts the contract back above the 20- and 50-day EMAs. Any continuation lower would open 6691.56, a Fibonacci retracement point. The contract has recovered today. Initial firm resistance now is 7025.46, the 1.0% 10-dma envelope. A break of this hurdle would be bullish.