IFX Market Report: Wednesday 28th April 2021

Cable was able to make subtle gains in Tuesday’s session as US Treasury yields rose in anticipation of the Federal Reserve’s 2-day policy meeting starting at 19:00 GMT. CNBC note that “The yield on the benchmark 10-year Treasury note advanced 18 basis points to 1.586% at 09:20 ET. The yield on the 30-year Treasury bond rose 13 basis points to 2.257%. Yields move inversely to prices”. Capping any real upside for GBPUSD are the latest troubles at Downing Street. Despite Boris Johnson denying the claim that he said he would rather “let the bodies pile high” in “their thousands” than order a third COVID-19 lockdown, the allegation alone has proved to be a hinderance to Sterling. When asked if he had made the remarks, the PM told broadcasters “no, but again, I think the important thing, I think, that people want us to get on and do as a government is to make sure that the lockdowns work, and they have”. According to Johns Hopkins University of Medicine, at present, Britain has the world’s 5th largest official COVID-19 death toll, with over 127K deaths, after the United States, Brazil, Mexico, and India.

GBPUSD started the day below the 1.39 handle trading at 1.3893. Ahead of the Feds latest meeting, Cable was able to surpass 1.39, closing the London session at 1.3914.

GBPEUR also made subtle gains in the Tuesday session. The pair opened at 1.1505 and closed at 1.1517.

EURUSD traded relatively tight once again, opening at 1.2075 and closing at 1.2081.

After the London close, the Fed meeting caused US equites to take a “breather… slipping from the intraday high it hit on Monday that had been fuelled by optimism about a global recovery from the pandemic and strong corporate earnings”. During the meeting, the yield on the 10-year Treasury also indicated a drop in price, as “the sell-off accelerated in afternoon trading despite a decent auction of seven-year debt that saw solid demand”. The FT report that “analysts expect Fed chair Jay Powell, at his press conference on Wednesday, to repeat his long-held message that the central bank will prioritise economic recovery and a strengthening labour market over making any moves to tame rising inflation”.

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