GBPUSD TECHS: Support Remains Intact

• RES 4: 1.3274 High Oct 3 ‘24  
• RES 3: 1.3207 High Apr 3 and the bull trigger   
• RES 2: 1.3017 61.8% retracement of the Apr 3 - 7 sell-off
• RES 1: 1.2899 38.2% retracement of the Apr 3 - 7 sell-off      
• PRICE: 1.2759 @ 16:28 BST Apr 8
• SUP 1: 1.2709 Low Apr 7
• SUP 2: 1.2669 2.0% 10-dma envelope 
• SUP 3: 1.2654 50.0% retracement of the Jan 13 - Apr 3 bull cycle
• SUP 4: 1.2559 Low Feb 28 

GBPUSD traded sharply lower Monday, extending the retracement from the Apr 3 high. For now, the sell-off appears corrective. Price has traded below the 50-day EMA - a concern for bulls - however, MA studies are in a bull mode position and this highlights a dominant uptrend. A recovery would open 1.2899 and 1.3017, Fibonacci retracement points. A move through Monday's 1.2709 low, would instead signal scope for a deeper retracement.

• The broader risk-off tone with the US pushing ahead with 104% tariffs on China sees Fed Funds implied rates continue their decline to session lows.
• Cumulative cuts from 4.33% effective: 14bp May, 36bp Jun, 58bp Jul and 100bp Dec.  
• Further out the curve, SOFR implied terminal yields meanwhile are back close to where they were at the NY crossover: at 3.125% (SFRU6), they’re 1.5bp lower on the day for 27bp lower since Liberation Day.
• Ahead at 1400ET - SF Fed’s Daly (non-voter) in a moderated discussion on the economic outlook (Q&A only). She hasn’t spoken since Apr 2 tariff announcements but told Reuters on Mar 28 that she still saw two rate cuts this year with the Fed able to take its time to assess the impact of tariffs.  She followed up after the interview with she’s not comfortable starting rate path declines and that the Fed is 100% focused on inflation.

• Having already softened ahead of the 1200ET China additional tariff deadline on a lack of developments, major US equity indices now turn negative:

"*S&P 500 TURNS NEGATIVE, ERASING GAIN OF AS MUCH AS 4.1%
*NASDAQ 100 TURNS NEGATIVE, ERASING GAINS OF AS MUCH AS 4.5%" - bbg

• ESA trades at ~5100 off a session high of 5305.25, having earlier cleared resistance at 5286.50 (Apr 7 high). Support not seen until 4823.00 (Apr 7 low).
• It follows official clarification of the earlier headlines from White House Press Sec Leavitt. 
  "*US MOVING FORWARD WITH 104% CHINA TARIFFS: OFFICIAL
  *ADDITIONAL CHINA TARIFFS START AT 12:01AM APRIL 9: US OFFICIAL" - bbg