GBPUSD TECHS: Bearish Outlook

• RES 4: 1.1185 High Mar 31 2022
• RES 3: 1.1122 0.764 proj of the May 31 - Jun 22 - Jul 6 pice swing
• RES 2: 1.1095 High Apr 26 and key resistance
• RES 1: 1.1054 High May 8
• PRICE: 1.1018 @ 05:48 BST Jul 11
• SUP 1: 1.0944/0898 Low Jul 10 / 20-day EMA
• SUP 2: 1.08687 50-day EMA
• SUP 3: 1.0834 Low Jul 6 and the bear trigger
• SUP 4: 1.0804 Low Jun 15

EURUSD traded higher Monday and is firmer today. The pair has breached resistance at 1.1012, the Jun 22 high, to confirm a resumption of the uptrend that started May 31. Moving average studies remain in bull-mode position reinforcing current trend conditions. The focus is on 1.1054 next, the May 8 high, ahead of key resistance at 1.1095, the Apr 26 high. On the downside, initial firm support lies at 1.0898, the 20-day EMA.

Regional equity market sentiment is mostly positive today. We did have modest positive leads from US & EU markets during Monday trade. US futures are a touch higher (Eminis last near 4446), but the main focus has been on fresh China policy support/stimulus, particularly in the property segment.

• Onshore China media has been focused on further property market support after the authorities urged local financial institutions to extend credit support to the troubled developer sector. The MNI policy team notes that property market restrictions may be eased in H2 (most likely after the July Politburo meeting).
• Other focus points are on boosting business confidence and consumption, see this link for more details.
• The CSI 300 is 0.63% higher at the break, last near 3870 in index terms. The CSI 300 real estate sub index surged at the open but is now up only a modest 0.12%. A Bloomberg measure of real estate owners and developers is doing better at +1.29%. The HSI is +1.53% at the break, the tech sub-index +2.06%.
• Elsewhere, Japan stocks are struggling for positive traction. The Topix last down slightly, while the Nikkei 225 was around flat.
• The ASX 200 is up over 1.10% with banks and mining related names leading the move higher.
• The Kospi is +1.34% firmer, while the Taiex has rallied by a similar amount. In SEA most markets are higher, but gains are more modest at this stage.

ACGBS are dealing stronger (YM +9.0 & XM +9.5), just off Sydney session highs as US tsys extend the strength seen in the NY session in Asia-Pac trading. Cash US tsys are 1-2bp richer than NY closing levels across the benchmarks.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Westpac consumer sentiment and NAB business confidence data.
• Cash ACGBs are 9bp richer with the AU-US 10-year yield differential -1bp at +21bp.
• Swap rates are 9-11bp lower with the 3s10s curve steeper.
• The bills strip is richer with pricing +4 to +10, early reds leading.
• RBA-dated OIS pricing is 2-8bp softer across meetings. The market attaches a 54% chance of a 25bp hike at the August meeting.
• Tomorrow the local calendar's highlight is RBA Governor Lowe’s speech to the Economic Society of Australia in Brisbane, titled ‘The Reserve Bank Review and Monetary Policy”. Investors will be hoping to gain insights into the central bank's level of concern regarding inflation after the policy pause this month.
• Tomorrow the AOFM plans to sell A$700mn of the 2.25% 21 May 2028 bond.