There have been spillovers of flow in the past coming into the first session of the month, but we have now passed the much-hyped rebalancing period, and over the past week or so, we have seen a very large amount of USD buying led by the real money sector (corporates also chipped in). Hard to say whether this is rebalancing related, but what I would say is that the market has taken the flow reasonably well, especially when you consider the tariffs headlines have turned more hawkish from Trump and Co of late. Looks like we are all set for an 8 pm (GMT) delivery tomorrow from the Rose Garden for reciprocals, and the broad key for risk will be whether or not Trump goes after VAT, but there will be plenty of moving parts for markets to pick apart and chase. There has been a growing confidence over the last few weeks that the UK will be coming out of this relatively well and may explain some of the resilience of the pound (especially versus the EUR), but clearly VAT reciprocity would nullify this completely. Also worth pointing out that Reeves has still not removed the digital services tax, and there were some headlines recently regarding the US State Department concerns over free speech in the UK. Sticking with EURGBP longs here, having weathered the multiple tests (and subsequent failures) of 1.20 in GBPEUR, looking for a close above the 200d at 0.8378 to signal further progress. Elsewhere, data is light for the UK this week with some final PMIs and the DMP on Thursday in contrast to the US with JOLTS and ISM manufacturing today and NFP on Friday. SHF finally broke their GBP buy streak of 12, while RM were better sellers over the past week, GBPUSD still remains stuck in the 1.2850/1.3050 range.
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thedailyfx.com/performance/
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thedailyfx.com/performance/
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Disclaimer
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