FX Update: A drop in the pound provided some directional action
FX Update: A drop in the pound provided some directional action in an otherwise narrow trading ranges so far today. The yen managed to eke out fresh lows against the dollar and other currencies before finding a footing. The pound was showing a 0.4% loss against the euro as of the late London morning session, and was showing a 0.3% decline against both the dollar and euro. While GBP-JPY has punched out a five-day high, Cable and EUR-GBP have remained within their respective Monday ranges, with the pound reversing most, but so far not all, of the gains seen yesterday. The rotation lower in the UK currency has been driven by news of a rise in support for Labour and a concurrent ebb in support for the Conservative party in latest opinion polling. Politico's poll tracker is showing Labour support at 31%, up 2 points from yesterday, with support for the Tories down a point, to 42%. Eleswhere, EUR-USD has been settled to narrow range trading above the 12-day low that was seen yesterday at 1.1003. USD-JPY made a two-week high at 109.20 before retreating to the upper 108.00s. Most yen crosses also saw new highs. AUD-JPY, for instance, saw a six-day peak. A cautious risk-on sentiment persisted in markets in Asia after the three major U.S. equity indices posted new record highs. Top U.S. and Chinese trade negotiators held a telephone conference yesterday, while China's Global Times reported that the two sides were "moving closer to agreeing" a phase-1 deal (now more than six weeks after first being announced). Fed Chairman Powell also threw in to the mix of sentiment drivers a remark that "the glass as much more than half full," while the ECB's chief economist, Lane, said that further stimulus would come if the inflation outlook worsens.