Forex Market Update: British Pound Bounces Back, With EUR/GBP Turning Over

Cable traded back above the 1.6400 handle amid reports of strong interest from Asian sovereign names. The British pound was buoyed by Middle Eastern interest, which came in at 1.6385 and continued up to highs of 1.6496. Offers across the 1.6500 level have held initially, but Middle Eastern names are layering bids and we may well see stops squeezed higher up, with equity markets also in the ascendency in Europe following the decent rebound in U.S. equities on Thursday. The move higher in Cable knocked EUR/GBP 0.8520 lows, while GBP/JPY rose sharply to hit 158.22 highs. Meanwhile, the BoE said in its Financial Stability Report that banks are still vulnerable to shocks, but this did not impact price action. Cable is expected to run in to offers ahead of yesterday’s 1.6468 Asian highs and across the 1.6500 handle, with buy stops noted above. The push back above 1.6400 has negated the bearish slant on yesterday’s daily chart, leaving sideways movement. Bids are expected in to 1.6350 and ahead of the 1.6300 area.