As Thursday begins all eyes move to the Jackson Hole Symposium as British Prime Minister Boris Johnson’s attempts to re-start Brexit negotiations with key EU leaders. 

Friday will be the main event at Jackson Hole as Fed Chairman Powell delivers a key speech. Despite the Fed minutes indicating July’s rate cut was purely a recalibration and comments from Kansas City Fed President Esther George that the rate cut was not needed, traders are hoping that he will allude to potential easier monetary conditions ahead. 

Quiet sessions in Asia and Europe sees the US day begin with a higher open for stocks, the Dow Jones up over 150 points. On the FX side, better-than-expected European Manufacturing PMI data sees EUR bounce up to 1.1110 but once again cannot break this area and settles back to 1.1080 in short order. 

The main mover, as has been almost the daily case recently, is GBPUSD which rallies powerfully through recent resistance at 1.2180 to a high of 1.2270.

A mix of stop losses, and the hope that a Brexit deal can be reached, finally saw GBP move higher. Although it should be noted that French President Macron rather contradicted German Chancellor Merkel in stating that the ‘backdrop’ was not negotiable. 

Next up, a comment from Philadelphia Fed President Harker who said he doesn’t see the need for another rate cut and believes the Fed should stay here ‘for a while’. This is enough to see the USD (except against GBP), gain 10-15 points across the board. 

The US yield curve inverts once more which takes the S&P and Nasdaq into negative territory. The US 10Y yield rises to 1.6%. Before long, the DJ also turns negative. 

For crypto, it’s a familiar story. BTC drops below $10,000 to touch $9,760, only to bounce straight back over $10,000 once more. 

ETH manages to touch $195. 

As the day progresses, FX is once again quiet with GBP having already done some damage. Equities fight back with the DJ turning positive to close higher by 49 points. The S+P and Nasdaq register small losses. All eyes and ears on Chairman Powell.

Well GBP was the real mover, a mix of technical and fundamental reasons. Of all the major currencies, GBP can still be a victim of some of the sharpest moves. The hourly chart shows the severity of the day’s moves. 

From 1.2150, straight through resistance at 1.2180 on the way to 1.2273. Of course, GBP will remain a victim of every headline around Brexit, but for now, 1.2180 should be a good support and the next strong resistance at 1.2423. 

For those new traders among you, cable is a great reminder of why you always want to have a stop loss placed somewhere! 

Keep up-to-date with market commentary and analysis. Trade with a broker you can rely on, visit tiomarkets.com for more information.

David Hannigan
Author

A graduate of the Cass Business School, Dave's career began with Credit Suisse as an Equity Options Trader on the London Stock Exchange, before moving into the world of FX with Chemical Bank and Citibank. 1994 saw him join National Australia Bank, first as a Senior Dealer, then Senior Vice President and Chief Dealer.

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