GBP, G10 and Sonia: Levels, Ranges, Targets

Sonia bounced another 6 points to 0.46 to now trade between the 8 and 9 year averages from 0.42 to 0.47. Previous severe oversold is now relieved and as price broke all averages from 1 to 8 years, Sonia remains quite low yet in good shape.
The 1 year average at 0.21 remains miles overbought. The average must travel higher over months ahead to offer support to the 2 year average at 0.3075 and to relieve severe overbought conditions. Above the 9 year average comes miles of distance to 0.94 at the 10 year. On the surface, a price at the 8 and 9 year average is far to high but viewed from stifled averages under zero interest rate rises over 10 years, its questionable. The 9 year Sonia average is actually within range Vs GBP from 0.67 to 0.39 against a mid point at 0.53.

A further view over 20 years might be the way to determine a terminal or Natural rate and if the current rise really is a one and done. Viewed from Fed Funds for example, 1 to 12 year monthly averages are miles overbought since May and August 2016. Monday’s calculations for Sonia final results are support points and the forecast will be re factored. Its the support points that should hold over the next year easily unless the UK implodes or disaster strikes.

GBP/USD overall break points are located at 1.3141 and 1.3126. Below 1.3126 targets range points at 1.3104, 1.3098 and 1.3016. GBP must first break 1.3111 then comes 1.3104. Above 1.3141 targets 1.3158, 1.3179 and 1.3223.

GBP/JPY overall break points are located at 147.94 and 146.35. The big break below is found at 149.44 and 149.34 and above targets 150.21 and 150.48.

EUR/USD break points are located at 1.1629 and 1.1790. A break at 1.1594 targets 1.1549 and 1.1533.

EUR/JPY break points are located at 131.27 and 131.05. EUR/JPY challenges break points by 131.64 and 131.46. If EUR/JPY breaks 131.05 then far lower over days ahead.
Brian Twomey