GBP/USD, EUR/USD, US Dollar Analysis and News:
- US Dollar Heading to Pandemic Peak
- Month -End Dollar Demand to Keep GBP and EUR on Backfoot
The US dollar rose from strength to strength as the index approached its pandemic peak at 103.00. After that, its key counterpart has experienced a bit of a delay with both the Euro and GBP remaining under significant pressure. Moreover, given that today is the end of the spot month (two days before the end of the actual month), also known as the USD corporate dollar demand day, there may be little obstacle to reducing the strength of the dollar. So, with the risk directed for another USD demand, this is unlikely to be a good sign for the Euro and GBP, perhaps even more so for the Pound, given the lower performance of the FTSE 100 against the S&P 500. What’s more with the risk of sentiment remaining soft, this adding extra weight to the Pound, putting the currency on the path to 1.25. For the USD, above the pandemic peak at 103 is the 2017 high of 103.82.
US Dollar Weekly Time Frame
Source: Refinitive
So far, the FTSE 100 has outperformed the S&P 500 by 6ppts. Looking back, during a period where the FTSE 100 has outperformed the SPX by at least 3ppts since 2010, GBP/USD on average had a tendency to decline towards the end of the month (as shown below) with a typical month -end spot performance at -0.22% with stroke rate 66%.
GBP Technical to Watch Out
Since the break below the 1.30 handle, there has been little significant support with only the 1.25 figure in focus. Even so, with the RSI being in oversold territory, while this doesn’t necessarily mean we could see a sharp release rally, it’s wise to tighten the stop if you’re short.
Source: Refinitive
At the same time, with the S&P 500 posting an MTD loss of 7%. The chart below highlights the average performance of EUR/USD at the end of the month, where the USD rose in the last few days of the month, before retracing the movement the following week.
