Ole Hansen
Saxo Bank’s head of commodity strategy Ole Hansen considers the implications of pledges by Saudi Arabia and Russia to raise oil production despite the likes of Iran and Venezuela not backing the move.
Article / 27 June 2016 at 11:29 GMT

Mid-session Europe: GBPUSD plunges to new 31-year low

Saxo Markets


Foreign exchange
The Brexit fallout has sent GBPUSD to a fresh 31-year low as the UK struggles to deal with the fallout. Equities are also on the slide as UK politicians try to calm nerves — unsuccessfully.


  • US Advance Goods Trade Balance — Expected -59.4b, previous -57.5b       (1230 GMT)  

  • US Jun. Preliminary Markit Services PMI — Expected 51.9, Previous 51.3 (1345 GMT) 


  • US Fed Chair Yellen to speak at ECB event (1730 GMT)

  • -ECB President Mario Draghi to speak (1730 GMT)      
Forex developments

EURUSD: EURUSD is acting as a safe haven alongside JPY. EURUSD closed a whisker above the 200-day moving average on Friday (200-dma 1.1099) and today this acts as key resistance. Downward pressure remains the theme.

JPY has room for more strength. A close of day below  the101.10 area on USDJPY opens it up for new attacks on sub-100. 101.10 area was a very decent support level for an extended time back in Q4 2013 and almost for another year before heading north on Bank of Japan stimulus. 

GBP: GBP has taken another dive lower, the downward pressure quite clear, but the difficult part is finding the levels to sell at as with such volatility stops could get hit easily. it is now at new historic lows. Technical chart do not tell much in such a scenario, but a Fibo chart of lows of March 1985 to the highs of Nov 2007 shows a Fibo at 1.2910.

FX Options volatilities 
Volatility is slowly coming lower, but the market is still not at full liquidity and therefore is still sensitive to any negative news or uncertainty.
Most activity is in EURUSD and GBPUSD, while in less liquid crosses like GBPJPY, AUDJPY or even EURAUD, there is only limited interest.
Implied vs historic analyses indicate curves to go lower over the coming days, but this will only happens gradually and require better liquidity in broker market.

 Fixed income
There is a risk-off tone to early trading this week following the political chaos in UK, which has Bunds recovering some of the losses in Friday’s rebound move. Corporate bonds, which saw very minor improvements in Friday’s session, have taken out the spike highs in CDS markets as the ITRAXX XOVER climbs another 20 basis points to 410 bps. The underlying cash market however is slightly more firm as liquidity has returned.




European stocks extend their post Brexit losses with the EuroStoxx 600 down 2.44% on good volume. Banks are in focus with the referendum decision most impacting the sector. The decision is thought to further damage their earnings when already under pressure.

A number of Tier 1 banks posted negative notes on European banks. The sector is therefore underperforming along with technology and consumer discretionary. Utilities, Energy and Health Care sectors are in positive territory.
The Italian government is said to be looking at various policy options to help its banks. UniCredit is down 5% and Intesa Sanpaolo down 5.75%. In the UK, there are big downward moves in the sector with RBS down 15% and Barclays down 13.5%.
Home builders continue to suffer, all down in excess of 10%. Persimmon is down 12%, Taylor Wimpey is down 15%, Berkeley Group is down 11.50% and Barratt Development is down 13%.
Gold prices continue to push higher helping the likes of Randgold Resources which is up 7.5%.
Airliners are being taken lower as GBP weakens. Ryanair is down 9.3% whilst Easyjet announced a profits warning which sees it lower by 19%. 

Join our Weekly OptionsLab on Wednesday  to find out more on covered call strategy.

Read more

Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.


London is still trying to navigate the maze after last week's landmark decison. Photo: iStock

— Edited by Martin O'Rourke

The Global Sales Trading desk is a multi-asset team providing customised trading solutions


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail