UK PM May sets off another GBP rout as Article 50 trigger for end Q1 2017 signalled

New post Brexit highs for EUR/GBP, Cable still testing for sub 1.2800. CAD gains scuppered. 

One clear theme through Monday’s session and that was the reaction to UK PM Theresa May’s interview on the weekend, which signalled a triggering of Article 50 by the end of Mar 2017. This was the momentum GBP bears needed, as last week’s attack on the downside stalled ahead of 1.2900 in Cable and .8724 in EUR/GBP. The cross rate managed to extend its post Brexit lows to highs just above .8740, and late in the day, sellers have been targeting the 1.2800 level, below which lies the respective post referendum low at 1.2798. GBP value buyers digging, but the price action suggests we are headed for much lower levels.  Not that the data justified this, as the UK manufacturing PMI’s printed a strong 55.4 read, up on expectations for Sep, and also the 53.3 seen for Aug, US ISM manufacturing was also strong, so USD buying naturally poured back into the GBP spot rate after a temporary reprieve towards 1.2900.  Elsewhere, the CAD made some tentative gains towards initial resistance at 1.3050, but as Wall Street opened in the red, we were back on a 1.3100 handle late in the day with soft RBC manufacturing impacting here.  WTI has been largely trading on a $48.0 handle, with little fresh news from the Oil producers. AUD/USD is well supported with RBA meeting ahead. No change in rates anticipated, but the rhetoric is likely to include currency strength, but broader risk sentiment has been dominating trade in tight ranges for today. USD/JPY received a modest boost from the US ISM, but the pair is clearly struggling in the upper 101.00’s.  EUR/USD is in a tight range, but was also pulled back on ISM, but also Cable selling as EUR/GBP offers at .8750 look pretty heavy. EU manufacturing PMIs were as expected, so much of the flow has been coming through the crosses again, but some banks calling for higher levels over the mid-long term.