Cable hits YTD high, OPEC decision coming
Sterling rose to its highest against the US dollar in 2020 with the greenback coming under more pressure this afternoon in a repeat of yesterday’s moves as the weaker dollar narrative shows no signs of running out of gas. GBPUSD advanced beyond 1.3490, its best since the Boris Bounce of Dec 2019 after the Conservatives won a strong majority and a run at 1.35 seems ‘on’ for bulls now.
That would see cable back to levels not seen since the soft Brexit narrative-driven 1.43 area of spring 2018. The moves are probably two-fold – one is clearly about dollar weakness with majors posting solid gains vs the buck. The other cause may be markets front-running a Brexit deal with indicators the UK and EU negotiators are heading towards the ‘big push’. Don’t worry lads, we’ll be eating sauerkraut in Berlin by Christmas…we know what overplaying Brexit headlines has been like but it feels like this time is different simply because we are running out of road.
EURUSD has risen to its strongest in over two and a half years, rising above 1.2170. As noted when we saw 1.20 breached, there is not a huge amount of resistance blocking a return to 1.25. USDJPY dipped under 103.70, its lowest since the Nov 6th low which preceded the massive Nov 9th rally. Dollar index making new lows as a result with pressure on all fronts taking it to some near-term support at 909.50. Little support through to 88.
Meanwhile, a word on OPEC – as of send time the meeting had begun with sources pointing to increase production slowly at a rate of 500k bpd from next year, either from Jan or Feb. WTI seems happy enough with $45 on the headlines but we await the final decision.