MEXICO: Analysts Still Expect 50bp Banxico Rate Cut This Month – Citi Survey

• +45,600 wk2 TY 112.75 calls, 1 ref 109-01 (expire Friday) - new trade, no open interest on option that expires Friday

• RES 4: 0.8474 High Jan 20 and a key resistance    
• RES 3: 0.8421 High Jan 27  
• RES 2: 0.8381 20-day EMA 
• RES 1: 0.8363 Intraday high  
• PRICE: 0.8297 @ 16:46 GMT Feb 3 
• SUP 1: 0.8296 Low Feb 3
• SUP 2: 0.8223 Low Dec 19 and a key support  
• SUP 3: 0.8203 Low Mar 7 ‘22 and a lowest point of a multi-year range   
• SUP 4: 0.8000 Round number support 

EURGBP is trading in a volatile manner. The bear cycle that started Jan 20 remains in play and today’s price activity has strengthened - for now - a bearish threat. A resumption of weakness would pave the way for a move towards the first key support at 0.8223, the Dec 19 low. On the upside, the 20-day EMA is seen as a key short-term resistance - at 0.8381. A breach of the EMA would highlight a bullish development.  

A new survey from Gallup has found that, “solid majorities of Republicans [voters] believe all five economic factors will improve over the next six months.”

• Gallup: “This includes three-quarters who say the stock market and economic growth will increase over the next six months and six in 10 who say inflation and interest rates will go down. Nearly as many, 57%, expect unemployment to go down, while 20% believe it will go up.”
• Republican optimism suggests there could be a snapback in approval for President Trump if his actions fail to bolster the economy and deliver on promises to lower interest rates and tackle inflation. 

Figure 1: Expectations for Key Economic Factors, by Political Party “Over the next six months, do you think that each of the following will go up a lot, go up a little, remain the same, go down a little (or) go down a lot?”

Source: Gallup