EUR/USD’s rally has been cut short with significant supply in the 1.3900/25 area capping the midday rally. EUR/GBP remains under pressure this afternoon as GBP shorts set up i the last few days are badly squeezed. Today’s GBP rally is surprising given the political disarray in the UK at present.
My working thesis is that the Barclays sale of BGI is prompting hedging on the part of the buyer, but I can’t prove it. Those flows are catching GBP shorts badly off-sides, helping accelerate the rebound in the pound.
GBP/USD is consolidating at 1.6045 after reaching 1.6070 a short while ago.
EUR/USD is at 1.3885 after runniing into heavy offers in the 1.3800/20 region.
Just crossing the wires is the IMF’s annual report on the eurozone. The headlines include that the ECB should consider further cuts in the refi rate as soon as possible. The EZ is missing a “proactive strategy” to deal with a weakened financial system.
