GBP Dips As Labour Close The Gap

It is Tuesday, 26th of November. Hope everyone's doing well. Just going to do a usual briefing for this morning and starting off just having a quick look at the British pound. I just had some latest opinion polling coming out. You can see the sterling just having a bit of a pullback down towards the lower bound of some of the price action that we had around midday yesterday. So around that kind of 2875 area in the futures. So below pivot already. Just jumping straight into that headline, and let's just have a quick look at what's going on. And let me just flick over to— this is the head analyst at Ransquawk, and he's just tweeted the update of some of the latest polls. And both of them are reflective of a very important thing that's seeing some of the weakness this morning, which is a reversal of what some of the opinion polls were suggesting at the weekend. If you remember, I think it was the opinion one for Observer. I think it was a 19-point lead, was one of the most commanding leads we've seen of the Conservative Party over Labour so far. That was at the weekend. However, this morning you've had an update most recently by Kantar where the Conservatives are now -2, Labour +5. So that gap now just 9. There was another poll I saw as well that was released yesterday where the gap is uh, and then you've had the ICM Reuters one where you've got Conservatives down 1 at 41 and Labour now at 34, up 2. So again, it's this narrowing of the polls which is being reflective, a little bit of negative at the moment, uh, as the Conservative lead just narrows somewhat. So a little bit downside pressure, um, on the back of those this morning. Because you can see here from yesterday's price action, a little gap up when the futures reopened, but it was a decent day of moving from really around 128.50, almost adding a full point to the move. And the predominant reason on the back of that was a likely higher likelihood of this happening, which is the Telegraph is still running this at the moment this morning, that the Tories are on course for a pretty resounding majority The Telegraph this morning saying an 80-seat majority. The Sun, I think, had their calculations at a 68 majority. But these latest opinion polls, as I've just described, would be the opposite of what that's suggesting. And consequently, just given that was the key reason why this— why the pound was rising yesterday, then it's equal force to, to pull it back a little bit in today's session. So again, a little bit of a movement to get things going in the currency market. Again, just looking on a 60-minute candlestick, you can see this— these areas here where the market has responded to. So anything breaking below there, probably looking at that S1, which encapsulates really around those highs you can see that we had during the overnight Asia-Pacific session, and then the eventual break and push that we had yesterday morning. To get things underway would be the next area I'd be looking at some key support near term if that downward trend continues in sterling. Otherwise, the other major theme of course is the equity market. After yesterday, we squeezed out new all-time highs again, but Sam is back and he's a, he's a bad luck charm for equities. Because he's such a bull that, um, be interested to see whether we can sustain this type of move. So let me just bring in the chart that I had marked up for the S&P 500 for a much broader weekly kind of outlook. And you can see here we managed to just get above that top end of the, uh, the kind of trend channel from May, July, then the all-time high that we printed just back a few— well, 19th of November, a few sessions ago, we, we did briefly break above that in the Asia-Pacific session. However, the markets immediately pulled back, and so at the moment those technical levels still very much in play for the time being. Yesterday's equity appreciation, of course, based on a couple of different things really. The sentiment surrounding some of the pro-democracy local election results looking to potentially just put a bit of a brake on the escalating violence we've had in Hong Kong. We've had positive developments over still what seemingly is progression on the Phase 1 conclusion of the trade deal, US and China. And then we had those big corporate deals— LVMH's planned takeover of Tiffany for just shy of $17 billion, and then Charles Schwab's $26 billion deal to combined with TD Ameritrade. I think there's one as well for Novartis. So lots of, uh, kind of M&A activity just helping the kind of bullish sentiment and helping some of that move. But you can see here that actual little blip that we had was overnight in the Asia-Pacific session. So light volumes. And if we just put this on a 5-minute to have a look, I would say if anything, that's probably just a bit of a technical break of a level. It doesn't appear that there was one singular headline that came out overnight to perhaps break that. I mean, I'm just looking on the headline feed. There was a headline around that time that China and US trade negotiators held a phone call and reached a consensus on solving issues while they agreed to keep in contact regarding Phase 1. So it looks like that's when basically this story broke and hit the tape. So if I just make this a bit bigger so you can see the headlines I'm talking about. This was the, the one you can see here. The timestamp was around 1:58. I think it actually hit the news terminal on Bloomberg about 10 minutes prior to the website. And so it was just talking about the positive developments, a second phone call that's happened in a short amount of time with the Vice Premier of China and the Trade and Treasury Secretaries respectively of the US. And so that's what contributed to that little overnight blip. But as you can see, and I think quite rightly so, after that move accentuated, I think, by the top end break of that, that trend channel we're looking at technically to hit those all-time highs. The market has pulled back and kind of consolidated, consolidated if anything, and that's because I don't think that news story really brings anything new to the table. Looking at where we're trading at the moment, just in a, on a 30-minute candle, I'd say taking into account the break that we had. I mean, it was definitely the cash equity open yesterday on the NYSE saw a real surge in market volume and that we just fired up across all three indices on the back of that move. And so I guess it's more about now if we were to pull back, where do we— where could we pull back to? So if I just move that ellipse from the news story overnight, I'd say near term you've got that initial test with the early birds coming in in Europe. That level there before the eventual move highest in the Asia-Pacific session and around the resistance point that was seen on the push the first hour of trade on the NYSE last night. And anything below there, probably coming back down towards pivot, would be another reasonable area on the pullback. Still to say that if all things remain equal, which I am at least buying anything unexpected looking for at the moment, then I still expect this kind of market to be supported up and around consolidating going into the, uh, the Black Friday kind of Thanksgiving holiday period, uh, at these near all-time high levels. So really support zones kind of seen around here and here on any further pullback. And then if we get further down, uh, towards the top end of that, uh, the price range that we had through the Asia Pacific and European session, uh, prior to the open yesterday. Uh, so again not that I'd be looking to get too aggressive or, or positive about pushing up again from here aggressively, getting, getting long. But I think if we did come back down, I think it would be more prudent to be on the long bias still, even though we're at these elevated levels. But predominantly looking for consolidation, as I said, from these levels. Other asset classes, because obviously Sam's back, so he can talk about his thoughts It's always good as well when someone's been off the desk for a few days for them to, to look at things quite fresh, to see what they're looking at. So be interested to see what he has to say. But otherwise, elsewhere in the other asset classes at the open this morning, pretty quiet. T-notes basically going sideways overnight, nothing substantial going on, pretty much mimicking the movement in WTI crude as well. Both those respective instruments are basically trading flat flat in the currency markets. Dollar index is flat as to then respective in EURUSD sub its pivot in the futures. It's really sterling weakness that's seen that, that little cable dip this morning. And then the DAX a touch softer as to in the euro stocks. The DAX already on the left chart here below its pivot. But again, I think perhaps then after that surge that we had yesterday a little follow-through with the release of that Bloomberg article overnight. So I think it's pretty— I don't think it's news-based, it's more just a natural closing out perhaps some of those short-term longs. So a little bit of a pullback may be warranted. The other thing that we had overnight, Fed's Powell did speak. So here he is, the main man of the Federal Reserve. He held his first speech having had that impromptu conversation with the Treasury Secretary Mnuchin and US President Trump last week. And what did he say? Well, he was pretty, pretty upbeat actually. He was talking about the glass is more than half full and could continue to do so, generally intimating that, that they've done the right thing in terms of markets now expectation that they're going to hold for the time being, saying that rates at the right level until the Fed sees a material change. So again, keeping optionality on both sides, whether or not to cut or to, to hike in the future, whenever that might be, but all dependent on how the economy evolves and develops over time. So nothing really too shocking. If anything, I guess it just reaffirms the current market expectations about where they're at with the Fed expectations. And with that note, let's just have a quick look at how the short end is pricing in the next interest rate change. So the next meeting for the Fed obviously happens on the 11th of December. Odds on completely here, 94%, that we're going to remain on hold. The next actual interest rate change is not actually anticipated. Well, if we follow this out, I think we're going to have to go way further out, probably. If we get to September, November 2020, so November 2020, markets price perhaps for a 25 cut. So really on hold for the foreseeable future, up until really another 12 months' time. But obviously these things are subject to quite large change depending on the macro environment. Other than that, I mean, that's pretty much it for me to say on my part. It's not a great deal of really new information coming out, so let me just jump straight to the, uh, the economic calendar. What have we got coming out for the rest of the session today? And it's particularly quiet if you're trading in the, the UK European morning, so do bear that in mind. And also keep in mind that yesterday was, was relatively quiet overall, but today and tomorrow we do— and particularly Wednesday, there's a distinct pickup in the amount and volume of North American data. Particularly out of the United States, because they're trying to front-load ahead of the Thanksgiving shutdown, because most traders, as I said yesterday, don't return for Friday. So definitely it's going to be a US-centric session today, just given the lack of calendar cues that you've got coming up for the morning. So for the US session, no kind of major 1:30s. These would be— you've got trade, the Advanced Goods Trade Balance number The building permits are the revisions. You do though have in the afternoon consumer confidence and new home sales coming out at 3 PM London, and then you've got the Richmond Fed Composite Index as well. The weekly oil inventories, of course, from the API later on after the kind of market close, so to speak. A couple of Fed speakers though, or ECB as well, that I should mention. De Guindos is speaking at around now, Coeur later. ECB's chief economist Lane is speaking as well this morning. And as to Fed's Brainard, a voter, kind of neutral leaning dovish stance, speaking at the Fed's Review of Monetary Policy Strategy, Tools, and Communication. That'll be later on at 6 PM. So other than that, it is a quite a, a quiet open, so I'm not going to speak more than is necessary. Necessary. I'm going to hand you over to Sam. Before I do though, don't forget, if you are watching this on YouTube, don't forget to like and subscribe to the channel for more daily updates. Okay guys, thanks very much.

Hi guys, good morning, uh, and we're doing well. And a quick look over at the pound is, you can see we did this push lower this morning but coming to about a pretty good area, 2875, which Anthony's got marked up here. And we'd really be keeping a watch on what goes on around there as a good line in the sand. Of course, if that was to go, S1 comes into play, which is pretty interesting, is a decent point from yesterday early morning. And then you're looking really at that sort of that gap from overnight on the weekend as well. And well, but below there it would get pretty tasty, along with this double, triple bottom, if you want to call it, from going back to the mid part, early part of November as well. So the pound failing to, by the looks of it, yes, they really confirm a push above 129, and, and since then it has dropped lower. But keeping as well— and watch, if we just move this down now, you could call it the pivot as well, but it's looking just a bit above it, 128.96. 127, just below 129 is an area where you would expect the, the sellers to want to try and protect. As well as that, looking at a trend line from yesterday's highs to today's highs as well. So price is getting squeezed in from the top there, breaking 129 to the downside. Keeping an eye on that. And then literally where we're trading now at 128.75 S1 and the gap close for the pound would be the main levels that I'd be focusing on. Euro, not too surprising to see, uh, drifting lower again just after you thought it might be pushing on. And keeping a watch, of course, on what is, uh, the previous low from the 14th, just below where we're trading here, 1.1095. And it does seem that every time we do push on, uh, we, we do come back lower. So with that It's worth having a look to see if there was any, uh, you know, trend lines that are coming into play. You can see it's relatively messy around there, to be honest. But below, uh, the low that we had on the 14th as well, worth having on, uh, this one from the 8th, as if we were to have a strong day to the downside like we've had over the last couple of trading sessions. Those would be the main levels that I would keep a watch on as well. From where we're trading. The highs from yesterday that we'll be keeping an eye on, 1.1039 and 1.1047. No real trend lines to be aware of, I'd say, from those highs. The pivot, of course, this morning being tested, uh, in the early hours. What time are we talking there? 6:15. So keeping a watch on that if it was to come up again. Um, and just have a look at that there. So yeah, this is probably worth having on here just from the, the downside low of the day, and then a couple recent lows as well. So looking at that potentially for a break lower to target this area from yesterday, where you can see the buyers have taken over quite a lot around 1.1020 as well there. So keeping a watch on those points. I'm gonna look over at gold. We'll put this on a 240. You can see, I mean, just we were talking yesterday about how important that 40.80 level was and didn't quite get there, did it? About, uh, uh, was that me? 5 ticks away, was it? 5 ticks away, 8 ticks away. Uh, just shows how key that area was. And the sellers since then have taken over and we've come back down to test these, these lows here. And since literally hitting that point, we have just been drifting down. So similar to the euro, and keeping an eye on the pivot because it would be another time that we've come to test it You got quite a lot of key resistance just above where we're trading, uh, below I should say R1, 1459.4. So that'd be the next key level that I'd be looking at to the down, uh, to the upside, uh, for the, the bears to control and, uh, and overall drift this market lower. Still, of course, that's helped by the fact that stocks have been pushing higher, which just seems to be the, the common play at the moment. So for gold, keeping an eye on the pivot just because of the recent test that we had coming again to test that now. And then above here, looking at yesterday, initial low, then some nice resistance yesterday, and also the R1. That would be the, the key point that I'd be looking at if we were to have a stronger move to the downside. Just got to be aware of those lows that we had from the middle to beginning of the month, the 11th 12th of November, 1450, that kind of area there. The S&P, as I said, has just been drifting higher. That trend line going back to the, uh, previous all-time high that we had back in May, so we are above that, but still keep that, that on. Just bringing that into picture, one second. Just bringing that one on from May here. Now you can see, uh, we did get above there briefly, uh, again this morning to find a bit of support back on that point as well. To be keeping an eye on any potential trend lines that are also going to the upside if we were to have a stronger push. You can see if we put this just down to the 60-minute time frame around the pivot, you can have a, a decent area of support potentially with some lows that we had from yesterday below there. The S1 also looks pretty good where we had a strong push yesterday following the cash open. So be keeping an watch what happens on that point. And then any potential bigger move to the downside, just got to always have, have marked up, I should say, the, uh, the gap from where we gapped higher on the weekend. And of course, if that was to get filled, back down towards 31, uh, 12 as well. So it's important levels to the downside. To the upside, just keeping an eye on these potential, uh, trend lines to come marked up. And of course, by, by the time that would get tested, we'd be trading around 3154, which is quite remarkable to think about that. But, uh, seems to be, like I was saying, the common play at the moment. To the upside, uh, closer to where we're trading, probably worth having on this trend here to see that getting squeezed in. But yesterday's high, initial high, just been tested as low for now, and also a retest of that trend. So keeping a watch on that. Oil couldn't really, uh, we can see yesterday, this morning, close above yesterday's high. We had a couple of tests of doing that around $58, which has been that all-important area going back here now for quite, uh, quite some time. We had a main attempt, you can see, on 22nd to get above that, but closing below. And yesterday could not get above there either. So relatively quiet morning, has to be said, for For oil, to the downside, we'd be looking at yesterday's low, which is also that high from the 20th— called it as well— the low from the 22nd, and the S1 as a real key important zone for the bears to take over. Would expect a quick move down to 57 if that was to break. The pivot, relatively choppy from yesterday's price action, so we'd almost be leaving that alone. And I think here for, for oil, it'd almost be yesterday day's high, uh, and the S1 that I'd actually be interested in getting involved in. The low from today, uh, 57.84, you would have marks up for sure. And it might be the way to look at this because like I said, the pivot is quite choppy. The only real play here to be waiting for that to break and, and using that as a bit of resistance going forward, uh, for a further move to the downside, sort of targeting that S1. The DAX on the open just pushing lower, but come back to test that pivot as an area of resistance. Keeping a watch, of course, on that previous low just before the pivot as that main resistance as well. Keeping an eye as well, if we had to have a further move to the downside, the gap fill, uh, as well that we could potentially see in, uh, EU equities as well. Any questions? As usual, of course, please, uh, do let us know. A couple of interesting levels out there, but as I mentioned, relatively quiet this morning before it picks up into the afternoon, uh, as well. Hope you have a good trading day, and I'll catch you all in the chat.