GBP: Potential Hammer Formation Headed into Trade Talks
Apr-23 07:57
- Tariff and Fed-independence induced volatility has prompted the potential formation of a hammer in the GBP/USD daily chart which, if confirmed, could see the pair establish a base and resume the short-term uptrend. Strength through 1.3400-24 would be key here - opening the 1.3434 bull trigger (the Sep'24 high).
- The prospects of a UK-US trade deal remain front page news. Today's Times runs that the government is "hopeful" that a deal will allow the UK to avoid the worst of the tariffs - specifically the 25% tariff on steel, aluminium and car imports - however the 10% blanket tariff could be here to stay. Chancellor Reeves is set to meet the US Treasury Secretary on Friday. The Times concludes that ministers hope that they will be able to get a deal over the line by the end of the month.
- JP Morgan write that GBP strength on any US-UK trade deal would present good entry levels to fade over the medium term - with any deal unlikely to undo the key impacts of the last months events on the currency. The UK could also get caught between opposing demands from the US and EU on trade. As a result, they use favourable levels to enter a short GBP position vs NOK, SEK cash basket. They see Sterling’s stagflationary reaction function as remaining on the table as a threat over the rest of the year.
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EQUITIES: EU Cash Opening calls
Mar-24 07:56
Estox 50: +1.06%, Dax: +1.10%, CAC: +0.78%, FTSE +0.50%, SMI +0.78%.
AUDUSD TECHS: Still Trading Above Support
Mar-24 07:55
- RES 4: 0.6429 High Dec 12 ‘24
- RES 3: 0.6414 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg
- RES 2: 0.6409 High Feb 21 and a bull trigger
- RES 1: 0.6391 High Mar 17 / 18
- PRICE: 0.6290 @ 07:53 GMT Mar 24
- SUP 1: 0.6258 Low Mar 21
- SUP 2: 0.6187 Low Feb 4
- SUP 3: 0.6171/6088 Low Feb 4 / 3 and a key support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
A short-term bullish theme in AUDUSD remains intact and the latest pullback appears corrective. Key short-term support to watch lies at 0.6187, the Mar 4 low. A break of this level is required to reinstate a bear threat. First support lies at 0.6258, the Mar 21 low. A resumption of gains would refocus attention on 0.6409, the Feb 21 high. Clearance of this hurdle would strengthen a bull cycle and resume the uptrend that started Feb 3.
STIR: Flash PMIs A Key Input Ahead of April ECB Decision
Mar-24 07:49
The March flash PMIs headline this week’s regional data calendar, with data from France (0815GMT), Germany (0830GMT) and the Eurozone (0900GMT) due this morning. Consensus looks for an improvement across services and manufacturing components relative to February (EZ composite exp at 50.7 vs 50.2 prior).
- The forward-looking components of the March Sentix and German ZEW surveys were stronger-than-expected following the recent German stimulus announcement, but sentiment around current conditions remains relatively subdued. The assessment of downside near-term growth risks and upside medium-term risks will be key ahead of the April 17 ECB decision.
- ECB-dated OIS price a 60% implied probability of a 25bp rate cut in April, with 50bps of easing priced through year-end.
- Euribor futures are -1.0 to -3.0 ticks through the blues, softening alongside Bunds on reports that Trump’s April 2 tariff announcement will be more targeted – as opposed to broad-based – than currently expected.
- ECB Executive Board member Cipollone provided dovish comments to Expansion this morning, noting that “current conditions make further monetary policy easing conceivable, as the outlook today remains consistent with our March projections”. A reminder that the ECB takes the market rate path (which at the time had terminal rates of below 2%) as given when compiling its quarterly projections.
- Cipollone’s comments around the balance sheet were consistent with his remarks at a recent MNI event: “The reduction in the central bank's balance sheet is putting pressure on banks' ability to lend. We therefore need to monitor this effect and consider it when calibrating the stance of our monetary policy”.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Apr-25 | 2.268 | -14.9 |
| Jun-25 | 2.101 | -31.6 |
| Jul-25 | 2.053 | -36.4 |
| Sep-25 | 1.969 | -44.8 |
| Oct-25 | 1.952 | -46.5 |
| Dec-25 | 1.917 | -50.0 |
| Feb-26 | 1.913 | -50.4 |
| Mar-26 | 1.914 | -50.4 |
| Source: MNI/Bloomberg. | ||
