GBP trades around its 23-month low ahead of NFP

Asian Indices:

• Australia's ASX 200 index fell by -173.4 points (-2.35%) and currently trades at 7,191.30
• Japan's Nikkei 225 index has risen by 180.03 points (0.67%) and currently trades at 26,998.72
• Hong Kong's Hang Seng index has fallen by -741.79 points (-3.57%) and currently trades at 20,051.61
• China's A50 Index has fallen by -361.57 points (-2.69%) and currently trades at 13,102.35

UK and Europe:

• UK's FTSE 100 futures are currently down -22 points (-0.29%), the cash market is currently estimated to open at 7,481.27
• Euro STOXX 50 futures are currently down -10 points (-0.27%), the cash market is currently estimated to open at 3,686.63
• Germany's DAX futures are currently down -24 points (-0.17%), the cash market is currently estimated to open at 13,878.52

US Futures:

• DJI futures are currently down -28 points (-0.09%)
• S&P 500 futures are currently down -24.25 points (-0.19%)
• Nasdaq 100 futures are currently down -5.75 points (-0.14%)

Sentiment remained fragile for stock investors overnight with the majority of the main benchmarks across Asia flashing red. Despite the Fed saying they don’t plan to hike in 75-bps increments, some think they should to tame inflation even though it further erodes gross and risks the possibility of tipping the economy into a recession.

Futures markets for European and the US are all pointing to a weaker open, and that has seen the US dollar retain a bid due to safe-haven flows and rising yield differentials.

GBP/USD consolidates near its 23-month low ahead of NFP

The BOE hikes rates yesterday as expected yet sent the pound broadly lower as they warned that growth could sow sharply over the next 18 months. Inflation is also expected to peak at an average of around 10% in Q4, which means they’ll be forced to raise rates further despite the bleak outlook for growth.

The US dollar appears to be form ahead of today’s nonfarm payroll report and the British pound is on the back ropes. Consolidating just off its 23-month lows, we would prefer to fade into resistance zones or enter on a break to new lows to target the support zone around 1.2252 – although 1.2200 also makes a viable target to consider should volatility remain elevated.

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