Category: UK

  • Sterling Consolidates Gains Ahead of US Data – Friday, 1 May

    Where we are: GBP/USD is currently hovering around 1.3610, consolidating gains made overnight. The pair traded in a tight range between 1.3580 and 1.3625 during the Asian and early European sessions. This level sits just above yesterday’s New York close, suggesting the pound is holding its ground despite a relatively quiet overnight session.

    What’s driving it: The Bank of England’s cautious stance and recent economic data are keeping Sterling supported. The MPC’s 8-1 vote to hold rates at 4.50% at the March meeting highlights their data-dependent approach, with concerns over persistent services CPI (near 5%) and wage pressures. The vote split reveals a dovish undercurrent (Dhingra dissenting for a cut), but the majority remains hesitant to signal an easing cycle. Recent UK CPI data showed a slight increase to 3.3%, further reinforcing the BoE’s wait-and-see approach. While the pound climbed in early May to its highest level since mid-February, this was influenced by both the BoE’s policy decision and a fresh surge in oil prices.

    • The Bank of England’s Monetary Policy Committee voted 8-1 to maintain Bank Rate at 4.50%, signalling data-dependent caution.
    • UK CPI rose to 3.3%, supporting the BoE’s reluctance to cut rates.
    • CFTC data shows moderately short GBP positioning, with net non-commercial contracts at -52,039, suggesting potential for a squeeze.

    NY session focus: All eyes now turn to the 10:00 ET release of the ISM Manufacturing PMI and ISM Manufacturing Prices data out of the US. A stronger-than-expected print could boost the USD and weigh on GBP/USD, testing support around 1.3550. Conversely, a weaker reading could see Cable pushing towards 1.3650 and potentially testing the 1.37 level. The trade that’s working right now is fading intraday dips in Cable, betting on continued BoE hawkishness. The trade that’s at risk is shorting Sterling against the Euro, given the ECB’s own reluctance to ease policy. The pain trade for GBP/USD would be a significant dovish repricing of BoE expectations if UK data softens considerably in the coming weeks.

  • FTSE 100 Faces Geopolitical Headwinds and Banking Sector Weakness – Friday, 1 May

    Where we are: The FTSE 100 is currently trading around 10,330, down roughly 0.5% on the session. The index has traded in a tight 40-point range so far today, failing to find sustained momentum in either direction. It’s below yesterday’s New York close and struggling to hold above the 10,300 psychological support level.

    What’s driving it: The Footsie is under pressure due to a combination of factors, primarily stemming from domestic banking sector concerns and escalating geopolitical tensions. NatWest’s warning about the potential £140m hit from the Iran war is weighing heavily on sentiment, overshadowing slightly better-than-expected pre-tax operating profits. Elevated UK inflation, as evidenced by the March CPI print of 3.3%, is also a concern, limiting the scope for near-term dovish surprises from the Bank of England despite the MPC holding rates steady at 3.75% yesterday.

    • NatWest impairment charge of nearly half of £283m stemming from Iran war fallout.
    • UK CPI climbed to 3.3% in March, up from 3.0% previously.
    • House price growth slowed to 0.4% in April, defying expectations of a steeper decline, suggesting some resilience in the housing market.

    NY session focus: With no major UK data releases scheduled for today, the FTSE 100 will likely take its cues from US market sentiment. Watch for any escalation in Middle East tensions which could further dampen risk appetite and drive flows into safe-haven assets. Key levels to watch are 10,300 as immediate support and 10,400 as resistance. The trade that’s working is shorting banking stocks on any rallies. The trade at risk is long energy, as a deeper risk-off move could pressure crude oil prices despite the naval blockade of Iranian ports. The pain trade is a sudden de-escalation in geopolitical tensions, triggering a sharp relief rally and catching shorts off guard.

  • Guppy Remains Bid as BoE Hawks Persist – Friday, 1 May

    Snapshot: GBP/JPY is trading around 192.50, up 0.2% on the session, buoyed by the relatively hawkish stance of the Bank of England compared to the Bank of Japan. BoE’s latest hold at 4.50% with a dissenting voice favouring a cut contrasts with the BoJ’s cautious normalisation bias, maintaining upward pressure on the cross.

    • Watch 193.00 as the next key resistance level.
    • Risk: A surprise dovish turn in BoE rhetoric or intervention from the MoF on Yen weakness could quickly reverse the trend.

    Bias into NY: We favour further upside in GBP/JPY, targeting 193.50, as UK unemployment continues to decline despite sticky inflation, keeping the BoE on hold for longer. Rising US 2Y and 10Y yields, while supportive of the dollar, are secondary to the monetary policy divergence favouring Sterling.

  • NY Session Tactical Brief – Thursday, 30 April

    Regime: Risk-on, fueled by dovish central bank pivots and a weaker DXY (98.33), as global yields decline.

    Today’s market themes:

    • Dovish repricing of global central bank outlooks, with focus on BoE and ECB.
    • USD weakness amplified by potential intervention risks in USD/JPY, testing multi-decade highs.
    • Geopolitical tensions (US-Iran) continue to underpin commodities volatility.

    The setup: Markets are positioned for lower rates globally, but BoE and ECB decisions are crucial. The trade is to fade USD strength on any hawkish surprises. Risks include stronger US data or escalation of geopolitical tensions. US 10Y at 4.389% and DXY at 98.33 are key levels.

    Watch list (native time per event):

    • 08:30 ET CAD: GDP m/m (forecast 0.2%, prior 0.1%)
    • 12:00 BST GBP: BoE Monetary Policy Report
    • 14:15 CET EUR: Main Refinancing Rate (forecast 2.15%, prior 2.15%)

    Bias by asset:

    • DXY:
      • Direction: Down
      • Domestic (US): Fed on hold, focusing on inflation; data-dependent bias.
      • Cross: Dovish global CB pivots weighing; intervention watch impacting.
      • Levels: Support at 98.00, resistance at 98.75.
    • EUR/USD:
      • Direction: Up
      • Domestic (EU): ECB likely dovish, but watchful of inflation and fragmentation.
      • Cross: Weaker DXY, supporting; focus on US-DE 10Y spread widening.
      • Levels: Support at 1.1650, resistance at 1.1720.
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): BoE holds steady; focus on inflation persistence.
      • Cross: DXY softness helps; US-UK 10Y spread still favoring USD.
      • Levels: Support at 1.3450, resistance at 1.3550.
    • USD/JPY:
      • Direction: Down
      • Domestic (JP): Intervention risk elevated; BoJ still dovish.
      • Cross: US 10Y dropping; risk aversion flows boosting JPY.
      • Levels: Support at 155.50, resistance at 157.50.
    • USD/CAD (Loonie):
      • Direction: Down
      • Domestic (CA): GDP key; BoC cautious; commodity support.
      • Cross: Weaker DXY; US-CA 10Y spread compression.
      • Levels: Support at 1.3645, resistance at 1.3700.
    • AUD/USD (Aussie):
      • Direction: Up
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness; Copper prices boosting; China growth hopes.
      • Levels: Support at 0.7100, resistance at 0.7170.
    • NZD/USD (Kiwi):
      • Direction: Up
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness; risk-on sentiment supporting; squeezed shorts.
      • Levels: Support at 0.5820, resistance at 0.5880.
    • USD/CHF (Swissy):
      • Direction: Down
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY drop; safe-haven demand waning; yields declining.
      • Levels: Support at 0.7830, resistance at 0.7900.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Down; GBP/JPY: Down.
      • Domestic: See individual currency biases for CB divergence.
      • Cross: DXY influence; risk appetite dictating flows.
      • Levels: Watch key support/resistance on the individual crosses.
    • XAU (Gold):
      • Direction: Up
      • Domestic (asset-specific): Real yields still supportive; geopolitical bids strong.
      • Cross: Weaker DXY; safe-haven demand persisting.
      • Levels: Support at 4550, resistance at 4660.
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): Industrial demand increasing; Gold-Silver ratio still elevated.
      • Cross: DXY weakness; risk-on tone helping.
      • Levels: Support at 7150, resistance at 7450.
    • WTI / Brent:
      • Direction: Neutral
      • Domestic (asset-specific): Supply concerns remain; EIA inventories in focus.
      • Cross: DXY influence; geopolitical risk premium embedded.
      • Levels: WTI support at 103.00, resistance at 106.00.
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): China growth hopes remain; LME stocks watched.
      • Cross: Global growth proxy; DXY weakness aiding.
      • Levels: Support at 590, resistance at 605.
    • SPX:
      • Direction: Up
      • Domestic (US): Earnings positive; Fed on hold supporting.
      • Cross: VIX subdued; global risk appetite constructive.
      • Levels: Futures support at 7130, resistance at 7220.
    • NDX:
      • Direction: Up
      • Domestic (US): Mega-cap earnings driving gains; real yields remain low.
      • Cross: Rates sensitivity still relevant; VIX relatively calm.
      • Levels: Support at 27200, resistance at 27700.
    • US30 (Dow):
      • Direction: Up
      • Domestic (US): Cyclical earnings holding up; financial sector performing.
      • Cross: Bond-yield reaction contained; risk-on flowing through.
      • Levels: Support at 48700, resistance at 49500.
    • UK100 (FTSE):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Global risk appetite boosting; US tone constructive.
      • Levels: Support at 22100, resistance at 22500.
    • DAX:
      • Direction: Up
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech strength helpful; DXY weighing less; risk regime strong.
      • Levels: Support at 23700, resistance at 24200.
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech providing support; risk appetite generally good.
      • Levels: Support at 58900, resistance at 59500.
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flows stable; funding rates watched.
      • Cross: DXY weakness supporting; Nasdaq correlation remains intact.
      • Levels: Support at 75000, resistance at 77000.

    Positioning watch: JPY remains the most crowded short (0%ile), making it vulnerable to a squeeze on any hawkish BoJ surprise or intervention. Copper, AUD and Bitcoin also hold crowded long positions (>80th percentile), making them vulnerable to sharp selloffs on weaker China data, stronger DXY or a risk-off event.

    The pain trade: A hawkish BoE or ECB surprise would trigger a violent short squeeze in USD/JPY and a broader risk-off move, hammering crowded longs in AUD, Copper and Bitcoin.

  • GBP/USD Edges Higher After BoE Hold – Thursday, 30 April

    Where we are: GBP/USD is currently trading at 1.3515, up 0.31% on the day, having traded in a range of 1.3454 to 1.3535. The pair is consolidating gains after the Bank of England’s rate decision, and trading above yesterday’s New York close. Intraday momentum remains positive, but the pair faces resistance at the recent high of 1.3535.

    What’s driving it: Sterling is finding support from the Bank of England’s cautious stance, even after holding rates steady at 4.50%. The 8-1 vote, with Dhingra dissenting for a cut, signals that the MPC remains concerned about persistent inflationary pressures, particularly in services CPI near 5% and resilient wages. Coupled with the BoE’s statement that they “stand ready to act as necessary” to steer CPI inflation toward its 2% medium-term target, this reinforces the perception that further rate increases are possible later this year. A weaker dollar, with the DXY trading down at 98.33, amplifies Cable’s upside.

    • The Bank of England maintained rates at 4.50% with an 8-1 vote, signalling reluctance to commit to rate cuts.
    • UK 2-year Gilts have declined 14bp to 4.449%, indicating easing near-term rate hike expectations, however this has not translated into weakness in Sterling.
    • CFTC data shows that speculators remain moderately short GBP, at the 27th percentile, suggesting squeeze risk.

    NY session focus: The key event for the NY session is the release of US Advance GDP q/q and Core PCE Price Index m/m at 08:30 ET. Strong US data could reignite dollar strength and pressure GBP/USD. Watch for a break above 1.3535 to target further upside, while a move below 1.3454 would signal a potential reversal. The trade that’s working is buying dips in Cable, while the trade at risk is shorting GBP against the prevailing trend. The pain trade would be a significant dollar rally driven by a strong US GDP print.

  • Footsie Surges on Dovish BoE Hold – Thursday, 30 April

    Where we are: The FTSE 100 is currently trading at 22440, up 282 points or 1.27% on the day, testing the upper end of its intraday range of 22135-22468. The index is building on gains seen in the EU session, fuelled by broad risk-on sentiment. It is significantly above yesterday’s close, driven by a dovish hold from the Bank of England and supportive corporate news.

    What’s driving it: The Bank of England’s decision to hold rates steady at 3.75% is the primary driver, with the market interpreting the MPC’s statement as dovish despite sticking to its vigilance on inflation. Gilt yields have fallen sharply, with the 2-year down 14bp to 4.449% and the 10-year down 9bp to 4.995%, boosting risk appetite and equity valuations. This dovish repricing is amplified by a general risk-on mood, with US futures firmly in the green and the DXY weakening, but the UK story is taking the lead.

    • The BoE’s MPC Official Bank Rate Votes were 1-0-8, with only Huw Pill voting for a hike, reinforcing the dovish message.
    • The 2s10s curve has steepened to +55bp, reflecting expectations that the BoE is nearing the end of its hiking cycle.
    • DCC’s rejection of a £5bn takeover bid from KKR and Energy Capital highlights underlying value in the FTSE 100, potentially attracting further M&A interest.

    NY session focus: All eyes will be on the reaction in US markets as they digest the BoE’s decision and its impact on global risk sentiment. The S&P 500 futures are pointing to a positive open, currently up 0.65%. Key levels to watch on the FTSE are resistance at the intraday high of 22468 and support around 22300. Watch for 08:30 ET US data prints and Fed speak later in the day to shape the risk environment. The trade that’s working is long UK equities; the trade that’s at risk is short Gilts. The pain trade would be a hawkish repricing by the market driving yields higher and reversing equity gains.

  • Sterling/Yen Cracks as BoE Holds, Gilts Slump – Thursday, 30 April

    Snapshot: GBP/JPY is trading at 211.97, down 1.91% on the day, after the Bank of England held rates steady at 4.50% with an 8-1 vote, as expected. The accompanying statement, viewed as less hawkish than anticipated, triggered a sell-off in UK Gilts and a sharp repricing lower in Sterling.

    • Key level: Watch for support around the 210.00 level, a break of which could signal further downside momentum.
    • Risk: BOE Gov Bailey speaks at 12:30 London; markets will scrutinise his remarks for clues about the future path of interest rates.

    Bias into NY: Bearish on GBP/JPY below 212.00. The BOE’s cautious stance, coupled with a dovish tilt in the vote split, suggests further Sterling weakness, amplified by a risk-off mood reflected in the Nikkei and Hang Seng closing down.

  • NY Session Tactical Brief – Wednesday, 29 April

    Regime: Mixed, as lower European equity indices and higher Brent prices offset positive sentiment from Bitcoin and US tech futures; VIX at 18.02.

    Today’s market themes:

    • BoC policy decision and press conference: Expect hawkish guidance from Macklem as inflation remains stubbornly high.
    • Hormuz Strait disruption fears support Oil: Geopolitical risks weigh as Brent hits one-month highs near $109/bbl.
    • USD awaits Fed decision: Dollar consolidating gains ahead of anticipated steady rates.

    The setup: Oil supply fears are currently the dominant driver, pushing Brent to $109. Focus now shifts to how the Fed will address these commodity price pressures at its upcoming meeting, particularly given continued indications that USD is “crowded long”. Rate decision + Powell presser could spur volatility. Watch for a DXY breakout if Powell speaks hawkishly or a sharp reversal if the Fed pivots dovishly on the recent inflation data.

    Watch list (native time per event):

    • 11:30 AEST AUD CPI m/m (forecast 1.3%, prior 0.0%)
    • 09:45 ET CAD BOC Rate Statement (forecast 2.25%, prior 2.25%)
    • 14:00 ET USD Federal Funds Rate (forecast 3.75%, prior 3.75%)

    Bias by asset:

    • DXY:
      • Direction: Neutral, awaiting Fed guidance.
      • Domestic (US): Fed policy decision, US data releases, US yield curve.
      • Cross: Risk sentiment, FX cross flows ahead of tech earnings.
      • Levels: Support 98.40, resistance 98.80.
    • EUR/USD:
      • Direction: Bearish, pressured by DXY strength.
      • Domestic (EU): Sticky Spanish inflation / peripheral spreads.
      • Cross: DXY strength, US-DE 10Y spread favoring USD, risk aversion.
      • Levels: Support 1.1690, resistance 1.1730.
    • GBP/USD (Cable):
      • Direction: Neutral.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, US-UK 10Y spread, risk-off flows.
      • Levels: Support 1.3490, resistance 1.3530.
    • USD/JPY:
      • Direction: Bullish, eyeing 160.
      • Domestic (JP): BoJ dovishness, intervention risk, JGB yields.
      • Cross: Rising US 10Y yield, DXY strength, risk-on flows.
      • Levels: Support 159.50, resistance 160.00.
    • USD/CAD (Loonie):
      • Direction: Neutral.
      • Domestic (CA): Hawkish BoC needed to push higher.
      • Cross: DXY strength, US-CA 10Y spread.
      • Levels: Support 1.3670, resistance 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish, after mixed CPI data.
      • Domestic (AU): Mixed CPI response, RBA watch.
      • Cross: DXY strength, US-AU 10Y spread, China growth concerns.
      • Levels: Support 0.7150, resistance 0.7200.
    • NZD/USD (Kiwi):
      • Direction: Bearish, pressed by the RBNZ’s easing bias.
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, US-NZ 10Y spread, risk-off flows.
      • Levels: Support 0.5850, resistance 0.5900.
    • USD/CHF (Swissy):
      • Direction: Bullish, supported by the SNB’s easing bias.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, safe-haven outflows from CHF.
      • Levels: Support 0.7880, resistance 0.7910.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Neutral.
      • Domestic: Relative BoE and ECB stance, relative yields.
      • Cross: DXY strength, risk sentiment.
      • Levels: Monitor key support and resistance.
    • XAU (Gold):
      • Direction: Bearish, pressured by real yields.
      • Domestic (asset-specific): Rising real yields pressuring gold.
      • Cross: DXY strength, risk aversion.
      • Levels: Support 4550, resistance 4630.
    • XAG (Silver):
      • Direction: Bearish, impacted by industrial demand.
      • Domestic (asset-specific): Demand mixed and impacted by real yields.
      • Cross: DXY strength, risk aversion.
      • Levels: Support 7180, resistance 7380.
    • WTI / Brent:
      • Direction: Bullish, supply disruption fears.
      • Domestic (asset-specific): Geopolitical factors driving surge.
      • Cross: Weaker DXY could add fuel to rally, risk on.
      • Levels: WTI support 100.00, Brent support 105.00.
    • Copper:
      • Direction: Neutral, but China key.
      • Domestic (asset-specific): Eyes on China growth, LME stock levels.
      • Cross: Global growth sentiment.
      • Levels: Support 595, resistance 603.
    • SPX:
      • Direction: Sideways, waiting on Fed and earnings.
      • Domestic (US): Eyes on earnings and Fed stance.
      • Cross: VIX regime, global macro.
      • Levels: Futures support 7160, resistance 7190.
    • NDX:
      • Direction: Neutral, focused on mega-cap earnings.
      • Domestic (US): Earnings and AI optimism.
      • Cross: Rates sensitive, watching VIX.
      • Levels: Support 27190, resistance 27320.
    • US30 (Dow):
      • Direction: Neutral, industrials in focus.
      • Domestic (US): Earnings focus and overall US data.
      • Cross: Bond yield reaction.
      • Levels: Support 49200, resistance 49420.
    • UK100 (FTSE):
      • Direction: Bearish, underperforming on Sterling strength.
      • Domestic (UK): Sterling and Gilt yields.
      • Cross: Global sentiment.
      • Levels: Support 22280, resistance 22450.
    • DAX:
      • Direction: Bearish, dragged by German yields.
      • Domestic (DE): German yields and data.
      • Cross: US tech and risk.
      • Levels: Support 23900, resistance 24100.
    • Nikkei:
      • Direction: Bearish, after BoJ inaction.
      • Domestic (JP): JPY levels and JGB yields.
      • Cross: US tech, risk.
      • Levels: Support 59700, resistance 60650.
    • BTC:
      • Direction: Bullish, trending higher.
      • Domestic (asset-specific): ETF flows supportive.
      • Cross: Risk-on environment.
      • Levels: Support 76000, resistance 78000.

    Positioning watch: USD and AUD are crowded longs, while JPY and NZD are crowded shorts. A dovish Fed surprise or positive Japanese data could trigger significant short squeezes in the JPY and NZD.

    The pain trade: A dovish hold from the Fed, coupled with commentary suggesting openness to rate cuts later this year, would trigger a sharp DXY sell-off and a rally in risk assets, catching crowded USD longs off guard.

  • Sterling Struggles to Hold Gains as Focus Shifts to Fed – Wednesday, 29 April

    Where we are: GBP/USD is currently trading at 1.3502, down -0.12% on the day, and struggling to hold onto gains. The pair has traded in a relatively tight range of 1.3495-1.3528 thus far, slightly below yesterday’s NY close, showing a mild bias to the downside. Overall, the mood is choppy; buyers failed to sustain an early probe above 1.3520.

    What’s driving it: Cable’s tepid performance reflects the BoE’s cautious stance amid resilient UK inflation, exacerbated by a strengthening dollar. The Bank of England held rates steady at 4.50% at its last meeting with an 8-1 vote, and recent CPI data showing inflation at 3.3% YoY in March (up from 3%) suggests that the MPC will maintain its data-dependent approach. The 2-year Gilt is up 6bp on the day to 4.493%, reflecting sticky inflation expectations, though it is difficult to see that bullish move translate into sustained Cable upside ahead of key USD risks.

    • The UK 2s10s curve is currently steep at +52bp, indicating expectations for future rate hikes, but the curve alone can’t overcome USD strength.
    • The latest CFTC data shows net non-commercial GBP positioning at -52,039 contracts, which is moderately short, but not at a squeeze extreme.
    • The Prudential Regulation Authority (PRA) published plans to support resilience in the life insurance industry, a sign of concern over stability in the financial sector but not a driver for Cable right now.

    NY session focus: All eyes are on the 14:00 ET FOMC decision, statement, and subsequent 14:30 ET press conference. A hawkish surprise from the Fed would likely send the DXY higher, putting further pressure on GBP/USD and targeting the 1.3450 level, while a dovish surprise could trigger a relief rally towards 1.3550. Keep an eye on US 2-year yields — a breakout above 3.88% risks triggering a deeper Sterling selloff. The pain trade here is a hawkish Fed *and* a rally in Gilts, which seems unlikely but would leave Cable vulnerable to a sharp downside correction.

  • FTSE 100 Stumbles Amidst Rising Gilt Yields – Wednesday, 29 April

    Where we are: The FTSE 100 is currently trading at 22288, down 108 points or -0.48% on the day, testing intraday lows. The index is underperforming its European peers and sits well off the session high of 22448. The current level is significantly below yesterday’s NY close, reflecting broader risk aversion and sterling strength.

    What’s driving it: The primary driver is a further rise in UK gilt yields, with the 2-year up 6bp to 4.493% and the 10-year climbing 2bp to 5.017%. This is weighing on domestic sentiment, compounded by Lloyds’ acknowledgement of a potential £151m hit related to the Iran war and rising UK unemployment. The DXY is firmer at 98.61, adding pressure, while US yields are also climbing, with the US 2Y and 10Y up 3bp and 1.6bp respectively, further exacerbating the negative sentiment.

    • The 2s10s curve steepened to +52bp in the UK, suggesting rate-hike expectations are being unwound to some extent, but the front end is still sensitive.
    • Lloyds’ profit warning linked to the Iran war is a domestically specific headwind for UK financials.
    • DCC’s potential takeover bid has injected some positive M&A sentiment, but it has failed to offset the broader macro headwinds.

    NY session focus: All eyes are on how US equities react at the 09:30 ET open following the mixed performance of futures. Keep a close watch on the US 10-year yield; a break above 4.40% could trigger another leg lower in the Footsie. Focus on how the FTSE 100 reacts to S&P 500 movement. The trade that’s working right now is short UK financials and long USD. The pain trade here is a surprise dovish signal from the Bank of England which seems highly unlikely in light of the recent CPI prints.

  • Guppy Strength Persists; BoE Rate Cut Bets Fade – Wednesday, 29 April

    Snapshot: GBP/JPY trades at 215.97, up 0.12% on the session. Hawkish repricing of Bank of England rate-cut expectations continues to drive the pair. No major UK data prints before the NY open.

    • UK 2Y yields are up 6bp d/d to 4.493%, signaling reduced expectations of near-term BoE easing.
    • Watch for potential profit-taking at the 216.00 level, and keep an eye on any fresh comments from BoE officials.

    Bias into NY: Bullish. The domestic rates picture favours further upside toward 216.50, especially if US yields continue to track higher as well.

  • NY Session Tactical Brief – Tuesday, 28 April

    Regime: Risk-off, as Nasdaq futures lead declines and gold tests three-week lows, driven by persistent inflation fears and higher front-end yields (US 2Y +3.5bp).

    Today’s market themes:

    • OPEC+ uncertainty: UAE exit sparks oil supply concerns, boosting crude prices.
    • BOJ disappointment: Yen weakens as BOJ holds policy, defying hawkish expectations.
    • Australian Inflation: RBA to watch closely.

    The setup: Market participants are repricing for potentially persistent inflation with focus on the Fed and data dependency. Rising yields and a stronger USD are weighing on risk assets. Front-end US yields are climbing, driving DXY higher (98.58) and pressuring equities. Watch for follow-through in NY session, especially tech given the Nasdaq’s underperformance.

    Watch list (native time per event):

    • 10:00 ET USD: CB Consumer Confidence (forecast 89.0, prior 91.8)
    • 11:30 AEST AUD: CPI y/y (forecast 4.8%, prior 3.7%)
    • 12:30 NZT NZD: RBNZ Gov Breman Speaks

    Bias by asset:

    • DXY:
      • Direction: Bullish.
      • Domestic (US): Fed likely to maintain hawkish stance given sticky inflation.
      • Cross: Risk-off sentiment and rising yields support demand.
      • Levels: Resistance at 98.75, support at 98.25.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and widening US-DE 10Y spread pressure pair.
      • Levels: Resistance at 1.1725, support at 1.1675.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and widening US-UK 10Y spread weighs on Cable.
      • Levels: Resistance at 1.3540, support at 1.3460.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ holds steady, reinforcing dovish stance. Intervention risk remains.
      • Cross: US 10Y yield rise widens US-JP yield differential.
      • Levels: Resistance at 159.80, support at 158.95.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and US-CA 10Y spread support pair.
      • Levels: Resistance at 1.3680, support at 1.3610.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): CPI data likely to inform RBA stance on rates.
      • Cross: DXY strength, China growth concerns weigh.
      • Levels: Resistance at 0.7195, support at 0.7150.
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ Gov Breman speaks; further easing priced in.
      • Cross: DXY strength and risk-off sentiment pressure Kiwi.
      • Levels: Resistance at 0.5920, support at 0.5865.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and safe-haven unwinding support pair.
      • Levels: Resistance at 0.7910, support at 0.7850.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP neutral, EUR/JPY bearish, GBP/JPY bearish.
      • Domestic: BoJ dovishness supports GBP/JPY.
      • Cross: DXY strength impacts all crosses; risk-off benefits JPY.
      • Levels: Watch key support/resistance levels.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields weigh on gold.
      • Cross: DXY strength further pressures gold.
      • Levels: Resistance at 4600, support at 4565.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Industrial demand concerns add to pressure.
      • Cross: DXY strength and risk-off sentiment drag silver lower.
      • Levels: Resistance at 7250, support at 7200.
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): UAE withdrawal from OPEC creates supply uncertainty.
      • Cross: Risk-off sentiment could limit upside despite supply concerns.
      • Levels: WTI resistance at $102, Brent resistance at $106.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns weigh on demand.
      • Cross: DXY strength adds to downward pressure.
      • Levels: Resistance at 600, support at 593.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Rising yields and mixed earnings reports weigh.
      • Cross: VIX trending higher; risk-off mood dominates.
      • Levels: Futures resistance at 7225, cash support at 7145.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Higher real yields and mixed earnings data weighs heavy.
      • Cross: Sensitive to increased rates and hawkish Fed stance.
      • Levels: Resistance at 27500, support at 27000.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): No clear catalyst — sensitive to overall market tone.
      • Cross: Resilient reaction to bond-yield movement in last session.
      • Levels: Resistance at 49500, support at 49300.
    • UK100 (FTSE):
      • Direction: Bearish.
      • Domestic (UK): Sterling weakness and global factors dominate.
      • Cross: Reacting sharply to global risk-off.
      • Levels: Resistance at 22500, support at 22400.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): Cautious outlook from ECB surveys.
      • Cross: Risk-off and tech weakness weigh on DAX.
      • Levels: Resistance at 24150, support at 23900.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): BoJ inaction pressures Nikkei.
      • Cross: Risk regime compounds effects on the downside.
      • Levels: Resistance at 60600, support at 59700.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Negative sentiment, ETF outflows.
      • Cross: Correlations with Nasdaq and risk assets weighing.
      • Levels: Resistance at 77500, support at 76000.

    Positioning watch: The crowded JPY short (0th percentile) is vulnerable to a squeeze on any surprise shift in BoJ policy or hawkish rhetoric. AUD and Bitcoin long positions (>85th percentile) are also at risk of a correction given the current risk-off environment.

    The pain trade: A dovish surprise from the Fed, reversing the yield spike and triggering a short squeeze in JPY, would inflict maximum pain on crowded short positions and boost risk assets.

  • Cable Under Pressure as Gilts Lag US Yields – Tuesday, 28 April

    Where we are: GBP/USD is currently trading at 1.3486, down 0.36% on the day, having traded in a range of 1.3463-1.3541. The pair is under pressure, sitting below yesterday’s New York close, as sterling fails to capitalize on any risk-on sentiment visible in pre-market Dow futures.

    What’s driving it: Sterling’s weakness stems from the underperformance of UK gilts relative to US Treasuries. The UK 10-year yield is at 5.007%, up just 2bp on the day, while the US 10-year is up 1.6bp to 4.364%, widening the US-UK yield spread to -64bp. This divergence suggests the market is more confident in the Bank of England’s cautious stance holding rates at 4.50% than the outlook for the Fed. The 8-1 vote split at the last meeting, with Dhingra dissenting for a cut, highlights the potential for a dovish shift if upcoming data disappoints.

    • The widening US-UK 10Y yield spread is exerting downward pressure, as the market prices in a potentially divergent monetary policy path.
    • UK unemployment remains elevated at 4.9%, reinforcing concerns about the strength of the labor market, even after the prior print showed a substantial decline.
    • CFTC data shows net non-commercial GBP positioning at -52,039 contracts, which is moderately short, but not yet at squeeze-inducing levels.

    NY session focus: All eyes will be on the 10:00 ET release of US CB Consumer Confidence, which is expected to show a dip to 89.0 from 91.8. A weaker-than-expected print could weigh on the dollar and provide some relief for GBP/USD, potentially targeting a retest of the 1.3541 intraday high. Conversely, a stronger reading would likely exacerbate the current downside pressure, potentially pushing Cable towards the 1.3450 level. The trade that’s working is fading rallies in GBP/USD. The risk to that trade is a surprise dovish shift in BOE expectations or a hawkish surprise from US data. The pain trade is a sustained rally above 1.36 driven by broad USD weakness.

  • Footsie Under Pressure as Gilts Rise – Tuesday, 28 April

    Where we are: The FTSE 100 currently trades at 22421, down 164 points or -0.72% on the session. Intraday, we’ve ranged from 22390 to 22584, failing to hold yesterday’s New York close. The index continues to suffer, marking what could be the seventh consecutive day of losses should this weakness persist into the NY session.

    What’s driving it: UK CPI figures released last month continue to weigh on sentiment, with the March print showing a rise to 3.3% YoY, exceeding expectations and increasing concerns about persistent inflation. This has pushed UK gilt yields higher, with the 2-year yield up 4bp to 4.450% and the 10-year up 2bp to 5.007%, adding pressure to equities. The potential for a rent freeze proposed by Rachel Reeves is also impacting the market, particularly buy-to-let mortgage lenders.

    • UK CPI YoY jumped +0.30 to 3.3% last month, spooking the market about inflation.
    • Shares in buy-to-let mortgage lenders are under pressure following the UK rent freeze report.
    • US 10Y yields at 4.364% continue to offer competition to equities.

    NY session focus: The NY session will be focused on how the market digests the higher gilt yields and their impact on UK financials. Keep an eye on the S&P 500 futures, currently down -0.58%, as overall risk sentiment will bleed into the Footsie. Key levels to watch are 22300 as immediate support and 22500 as resistance. The trade that’s working is shorting UK financials, particularly those exposed to the buy-to-let market. The pain trade would be a surprise dovish shift from the BoE repricing, triggering a short squeeze.

  • Guppy Faces Downside Pressure After BoJ Hold – Tuesday, 28 April

    Snapshot: GBP/JPY trades at 215.19, down 0.27% intraday, as markets digest the BoJ’s decision to hold rates at 0.50%. With no change in the BoJ’s outlook, and a focus on Yen weakness, the pair faces a headwind ahead of the 03:30 ET press conference.

    • Watch for any shift in tone from Governor Ueda during the presser; a hawkish surprise could see a test of the 214.96 day low.
    • Risk appetite remains fragile (S&P futures down 0.58%); a further deterioration would pressure GBP/JPY.

    Bias into NY: We see downside pressure on GBP/JPY as the BoJ remains cautious despite Yen weakness; a break below 214.96 could open a test of 214.50. We see UK yields firming slightly but unable to offset the BoJ risk.