HALISTER1: INSIDE G-10: GBP Gains as Poll Shows Remain Camp Widens Lead

INSIDE G-10: GBP Gains as Poll Shows Remain Camp Widens Lead

(Bloomberg) -- GBP outperforms G-10 currencies after poll shows U.K. voters likely to vote to stay in the EU; AUD advances for a second day after minutes from the RBA policy meeting suggest the bar for a rate cut in June may be high.
  • European stocks up about 0.6%, buoyed by risk appetite; crude oil rises to approach $50/bbl
  • GBP/USD up 0.6% to 1.4484; traders report heavy two-way flows
    • Buy stops on GBP were triggered after ORB/Telegraph poll showed 55% would vote for the U.K. to remain in the EU vs 40% opting for an exit
    • Cable trims gains after data shows U.K. inflation was 0.3% last month versus median forecast of 0.5%
    • Resistance at 1.4500, the 38.2% Fibonacci retracement of drop since May 3 and 1.4531, the high on May 12
    • Pound most correlated to EM currencies since the financial crisis
    • GBP/USD could continue grinding higher after successful test and bounce at 100-DMA, charts suggest
  • AUD/USD up 0.5% to 0.7328
    • Minutes show the RBA had considered holding at the May policy meeting to await more information; RBA actually cut benchmark rate by 25 bps at the review
    • AUD rally a good opportunity to position for further weakness in the currency: BNP Paribas
    • ABN Amro cuts AUD/USD forecasts; sees support above 0.70
  • USD/JPY up 0.5% to 109.61; yen falls most vs USD among G-10 currencies amid risk-on sentiment
    • Pair testing key resistance; next level in sight is 110.39, 76.4% Fibonacci retracement of April 28-May 3 drop
    • Japan 1Q GDP data due tomorrow amid speculation there may be a delay to planned sales-tax increase, but PM Abe says nation will go ahead unless there is a serious event
  • EUR/USD little changed at 1.1326 vs 1.1311-1.1340 range
    • Offers accumulating near 1.1400; corporate and leveraged offers at 1.1325-35 filled as London session started: traders
    • EU640m worth of options expire today at 1.1275-80: DTCC
    • IMF is pressing the euro zone to let Greece skip paying interest or principal on bailout loans until 2040, WSJ reports
  • BBDXY little changed at 1,187.11 vs 1,184.13-1,187.49 range
    • China likely to increasingly anchor yuan to currency basket; USD strength likely with possibly two Fed rate increases this year, says Marc Chandler, head of currency strategy at Brown Brothers Harriman
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Marc Chandler (Brown Brothers Harriman & Co)

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