GBPUSD TECHS: Bearish Threat Still Present

European bonds traded mixed Friday with Gilts underperforming, but ultimately posted gains on the week.

• EGBs and Gilts were slightly on the front foot in early trade, with a downtick in oil and weakness in equities helping a global bid for bonds. By the same token, a bottoming of energy prices alongside equities finding their feet saw bonds come off the session highs by early afternoon.
• Gilts were weighed down in particular. Though there was no clear identifiable trigger, one possible factor was ITV's Peston noting that foreign secretary Cooper eyed "further faster" increases in defence spending.
• A brief downtick to session lows around 2:30pm London time came amid reports of the UAE warning of missile threats (later rescinded, reversing the move).
• In data, Year-ahead consumer inflation expectations fell notably in the ECB's May consumer survey, while German IFO Employment neared cycle lows in June. Italian consumer confidence pulled back in June, though there was a broad-based uptick for business sentiment.
• On the day, the UK curve bear steepened, while Germany's twist steepened. For the week, Gilts and Bunds traded largely in parallel: UK 2Y -13bp / 10Y -11bp, German 2Y -13bp / 10Y -13bp. Periphery/semi-core EGB spreads edged slightly wider to Bunds in the session.
• Next week's calendar is front-loaded, with Mon-Wed seeing both the ECB's annual forum on central banking in Sintra as well as the Eurozone flash inflation round (MNI preview here).

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.1bps at 2.517%, 5-Yr is down 1bps at 2.586%, 10-Yr is down 0.6bps at 2.851%, and 30-Yr is up 0.4bps at 3.408%.
• UK: The 2-Yr yield is up 1bps at 4.125%, 5-Yr is up 2.9bps at 4.28%, 10-Yr is up 3.2bps at 4.731%, and 30-Yr is up 4.4bps at 5.448%.
• Italian BTP spread up 0.2bps at 73.5bps / French OAT up 0.9bps at 78.2bps

-3,500 TYQ6 110 straddles, 105 ref 110-08.5

• RES 4: 0.8747 76.4% retracement of the Feb 27 - Mar 16 bear leg
• RES 3: 0.8742 High Mar 31 and Apr 1 and a bull trigger
• RES 2: 0.8731 High May 18 
• RES 1: 0.8653/94 50-day EMA / High Jun 22
• PRICE: 0.8633 @ 16:02 BST Jun 26
• SUP 1: 0.8610/03 Low Mar 16 and the bear trigger / Low Jun 24
• SUP 2: 0.8597 Low Aug 14 ‘25
• SUP 3: 0.8577 Low Jul 2 ‘25
• SUP 4: 0.8544 50.0% retrace of the Dec 19 ‘24 - Nov 14 ‘25 bull leg   

A bearish threat in EURGBP remains present. Note that moving average studies are in a bear-mode position and this also continues to highlight dominant downtrend. Sights are on the key support and bear trigger at 0.8610 (pierced), the Mar 16 low. A clear break of this level would highlight an important medium-term bearish development. Key short-term resistance is 0.8694, the Jun 22 high.