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TD Research discusses GBP/USD and EUR/USD tactical outlook and sees limited scope for near-term gains.  

"The good news is that the worst may be over, but the downside is that GBP has priced in excessive optimism now. We think the fresh upside is limited but coupled with the easing of US/China trade tensions risk markets should benefit into yearend. Together with a Fed that sees some optimism on the external environment, this backdrop reinforces the recent top in the broad USD," TD notes. 

"EURUSD spot is likely capped around 1.12 for now but we note that 3m call spreads (1.12/1.15) look quite attractive out of the gates in 2020,' TD adds.

• USD/JPY's risk-on 109.71 high just shy of the 109.73 trend high

• Good vibes after UK vote, ahead of US-China trade deal backed the rise

• Profit-taking on both drivers & below 200-DMA, TL @109.80 nL1N28N0C8

• Trade deal confirmation faded on limited tariff rollbacks nL1N28N0V5

• Soft US retail sales also trimming Thur's big Treasury yields rise

• USTR trade deal details nL1N28N0V5 in PM lessens poor deal response

• Weekly close above 55-WMA at 109.26 would be a plus, below a drag

• Focus Monday is on global PMIs for December

• GBP/USD ends NY by session low, +1.17% at 1.3333; NorAm range 1.3394-06

• Cable well off post-elex high 1.3516, large option int 1.32-1.35 anchors

• Attn turns to transition period which runs to Dec 2020, extension a issue

• Brexit reality sets in as sterling election gains cut in half nL1N28N0GR

• GBP/USD supt NorAm low 1.3310 area, 1.3240 upper 30-d Bolli (fmr res)

• EUR/GBP -1.32% to 0.8341, Fri range 0.8426-0.8278, EUR dips on tariff talk

Credit Suisse discusses GBP/USD technical outlook and maintains its bullish regime change view CS has flagged out since early December. see (here) and (here).

"We stay bullish with next key resistance at the “neckline” to the early 2018 top at 1.3712,GBPUSD has surged dramatically higher as the results for the UK election came in, reinforcing our “regime change” scenario with the market clearing with ease resistance from the 1.3381 March high for the year.

We maintain our core bullish outlook and look for further gains with resistance seen next at 1.3569, ahead of 1.3608/18 and then more importantly at our main flagged resistance/”objective” at 1.3712 – the “neckline” to the early 2018 top," CS notes. 

"We continue to view this as a much tougher proposition and we look for this to ideally cap, at least at first, prompting a consolidation/corrective phase. Should strength directly extend, we see resistance next at 1.3797/1.3804, then 1.4000, with the next major resistance seen at the 1.4346/77 highs of 2018," CS adds. 

GBP/USD has backed down from post-election highs above 1.3500, trading a more moderate 1.2% higher on the day near 1.3335, as post-election realities temper its celebratory gains.
Having run on the promise to "get Brexit Done" and to not seek a extension to the transition period PM Johnson has the daunting task to follow through, which could limit sterling upside.
Johnson's large majority will allow the UK and EU to move onto the transition period nL8N28N3AV, where the UK and EU will negotiate trade, immigration, legal and security issues, among others, by the end of 2020 nB5N27Y032.
With much to negotiate in a short 11-month period failure to resolve all issues by year-end 2020 may once again raise fears of the UK crashing out of the EU with no deal nL4N28N2SM. If the UK requests an extension, it would have to contribute to the EU budget raising the ire of the electorate, and more hard-Brexiteers within Tory ranks.
For now, resistance seems firm at 1.3516 today's overnight high and 1.3618 the May 10 2018 high.
Cable finds support at 1.3284 the 50% Fib of the recent 1.3051-1.3516 rise and 1.3225 the upper 30-d Bolli.

MUFG Research sees a scope for further USD/JPY gains towards 110 on a formal announcement of Phase-1 trade deal. 

"The deal is somewhat more positive than expected – not only does it avert the tariffs that were scheduled to be ratcheted up on the 15th of December but the Trump administration has offered to pare back roughly half of the existing tariffs on around USD360 billion of Chinese imports into the US. These are expected to be announced officially today. In return, the deal will see China buy USD50 billion worth of agricultural goods in 2020 from the US," MUFG notes. 

"It is important to note that official announcement of the deal, which is expected today, is still forthcoming and that the Chinese state and media have been relatively mute on the matter. A formal announcement and then indication of acceptance from China could see USD/JPY head further towards the 110.00-level," MUFG adds. 

• AUD/USD is holding above 0.6910 (200DMA) as it consolidates recent-day gains

• 0.6939 was 20-week high in Asia, after UK election exit poll nL1N28N02S

• Prior AUD gains were fuelled by optimism about a China-U.S. trade deal

• U.S. sets China trade deal terms, sources say, but Beijing mum nL1N28M1JR

• Retreat from 0.6939 based a pip shy of 0.6910 (0.6913 was Thursday's high)

• Mooted offers ahead of 0.6950 are an appreciation obstacle beyond 0.6939

Corrects 200-dma to broken, rather than closed above

EUR/USD Broke it's 200-DMA 1.1153 Thursday for the first time since June, but yet to close above. More significant resistance is at 1.1275 -- 23.6% Fibonacci retracement of the 1.2556-1.0879 - 2018-19 slide, although a close above that 200-dma and a 55-WMA at 1.1212 today could make that Fibo a target.
However, option pricing shows no real expectation of a sustained rally, certainly in the short term.
There's been no real pick-up in demand for options that would benefit from EUR/USD pushing too far above 1.1200 before the end of the year.
Implied vols are still trading close to record lows, which signals a lack of expected volatility.
Risk reversals retain an implied vol premium for EUR calls versus puts (the right to buy EUR/USD versus sell it), but that's been in place for some time and hasn't increased.
Finally, the options market is still very long of existing option strikes in the 1.10-1.1200 range before year's end, which is helping hold down overall volatility and its ability to rally -- even a test above will attract more hedge flows and profit taking nL1N28D060

• USD/JPY powers higher, registering the biggest daily rise since August 26

• Thursday's gain was a decent 72 pips, according to EBS prices

• That increases the chances of an even bigger recovery to the 110.53 Fibo

• 110.53 is 76.4% retrace of the 112.40 to 104.46 (April to August) drop

• The thick daily cloud, which spans the 107.62-108.36 region, props into 2020 We are long at 109.00 for 110.50. EUR/JPY sees a 121.37-122.58 EBS range

• USD/JPY Trading Page TGM2336. Previous update nL1N28M064

• Big election driven rally in GBP and charts now trying to settle

• Pullback risk given speed-magnitude of rise but can't ignore bull potential

• Weekly cloud and 200WMA cleared easily and now give support

• 100 and 200WMA are converging, 1.3050 and 1.3098, bull cross risk

• Looking higher and levels thin out: Session high 1.3516, 30HMA Bolli 1.3548

• Bigger levels 1.3608 May 2018 high and 1.3806 76.4% Fibo 1.4377-1.1959

  
  

• EUR/USD: 1.1120-25 (1.3BLN), 1.1135-40 (550M), 1.1150-55 (1.1BLN)

• 1.1160-70 (750M), 1.1180-85 (400M), 1.1200 (611M)

• GBP/USD: 1.3295-1.3300 (900M), 1.3400 (1.4BLN), 1.3450 (1BLN), 1.3500 (450M)

• EUR/GBP: 0.8300 (425M), 0.8350 (500M), 0.8400 (600M)

• AUD/USD: 0.6885-0.6900 (1.6BLN)

• USD/CAD: 1.3125 (500M), 1.3140-55 (1BLN), 1.3225 (210M), 1.3250-60 (730M)

• USD/JPY: 109.00 (475M), 109.50 (560M)

• Trades close to the top of a 1.3181/1.3516 range, after a hectic session

• EUR/GBP is at the base of a 0.8278/0.8426 with huge flow for Asia

• Bids at 1.3450 provided a base after initial jump - 1.3450 1BLN strikes

• Early results support the exit poll prediction of an 86 Boris landslide

• EU welcomes a strong UK mandate into upcoming trade talks nL8N28M78I

• Charts show GBP trending higher, but over stretched short term nL1N28N01Q

• Stunning Conservative victory will totally change UK politics nL8N28M6XR

• Close above 1.3453, 61.8% 2018/2019 fall a strong positive for next week

• AUD/USD traded to 0.6939 after a flood of good news sent risk higher

• Pair traded up to 0.6913 on US-China trade deal news late in US session nL1N28M1JR

• Exit poll showing resounding Conservative win sent AUD/USD to 0.6939 nL8N28M6YT

• Sellers stacked ahead of 0.6950 discouraged further buying

• AUD/USD settling around 0.6920, but sentiment remains bullish nL4N28M56D

• Former resistance at 200-day MA at 0.6910 now support and close above would be bullish

• Not much resistance ahead of the psychological 0.7000 level

  
  

• Consolidates the 2.2% bounce on a likely landslide Johnson win nL8N28M6XR

• Charts remain very positive with 5, 10 & 21 daily & wekly MAs trending north

• Trades around 1.3453, 61.8% of the 2018/2019 fall, after touching 1.3516

• Close key for next week, above 1.3453 targets 1.3806, 76.4%, 2018/19 dip

• Close below 1.3453 61.8% would leave a top in place at 1.3516

• Rising 21 day upper Bolli band at 1.3321 suggests GBP overdone short term

• Longer term the 21 day daily Bollinger bands are supportive

• EUR/USD barrels above 200 DMA resistance 1.1154 on EBS

• Positive UK election, US-China trade headline spur risk-on rally

• But sustainability of the rally depends on close above 1.1154

• Bollinger uptrend channel will also be reaffirmed; base at 1.1112

• US-China deal agreed by Trump, tariffs to be cut nL1N28M1JR

• UK PM Johnson's victory clears the air, paves way for EU trade talks

The news flow over the past 24 hours could not have been better for AUD/USD bulls.
The FOMC event was viewed as being on the dovish expectations to undermine the USD nL1N28L1GT.
The "agreed to in principle" U.S.-China trade deal exceeded expectations to give EM assets and currencies a strong lift nL1N28M1JR and the exit polls indicate the Conservative will have a resounding victory, which will lead to the long-awaited Brexit deal nL8N28M6YT.
The optimists have been proven correct on all counts and cheerful investors will likely ensure a sizable risk rally through to the end of the year.
The AUD/USD traded to a fresh five-month high above 0.6930 and there isn’t much in the way of technical resistance this side of 0.7000.
While the 200-day MA at 0.6910 holds on dips, the AUD/USD is poised to make tracks for the July 19 high at 0.7082 in the days and weeks ahead.
The RBA won’t like it if the AUD/USD rise accelerates, but they don’t meet again until February and there is unlikely to be much in the way of communication between markets and the RBA through the holiday period.

Bank of America Global Research flags a scope for USD/JPY upside through Q1 of next year on the back of strong M&A flow.

"We have estimated the average interval between an M&A announcement and completion to be about four months. December is also a seasonally strong month for M&A by Japanese corporates. It suggests Japan's outward M&A would provide support for USD/JPY through announcement impacts and flow into 1Q20," BofAN notes. 

"In fact, USD/JPY reversed its downtrend during Tokyo trading hours in August and has grinded higher, partly owning to M&A flow, in our view. Longer term, increased foreign exposure may lift volatility in the FX and equity markets around turns in the business cycle," BofA adds. 

• Pair lifts slightly in early NY; technicals encourage longs nL1N28M0JC

• Rally intensifies a bit on Trump, WSJ trade headlines nL1N28M0XX

• Global bond yields, stocks & commodities gains, USD/CNH fall buoy AUD/USD

• Rally stalls just short of 200-DMA, some gains erode as US$ buys persist

• Slight pull back sees AUD/USD near 0.6990 late, still +0.22% late in the day

• Techs are bullish, RSIs rise, t-l off Dec '18 high breaks

• Clean breaks above 200-D<a, october="" high="" should="" target="" 0.700/15,="" july's=""></a,>

GBP/USD is taking a hit as markets turn jittery over today's UK election, which could result in a Brexit under the current agreement or more uncertainty about Britain's plans to leave the EU.
Since the YouGov poll nS8N26U03B on Tuesday showed a drop in the parliamentary majority projected for the Conservative Party, sterling has fallen under the sway of alternating market interpretations.
The pound was initially hurt by the narrowing in the Tory majority forecast, then recovered on notion that a majority was still foreseen, however diminished.
The pound has reverted to losses today as results of voting are awaited.
The stakes are considerable for GBP/USD.
The market's skepticism over the size of the projected Conservative majority, current GBP/USD weakness and high overnight volatility FXVV, highlights the risks involved.
A wide Tory majority will likely boost GBP/USD near 2019 highs by 1.3380.
A slight majority or minority will likely see GBP/USD melt through support at 1.2914, the 10-WMA and eye a move toward 200-DMA support at 1.2697.
With further reversals of recent gains eyeing the October lows by 1.2200 nL1N28M0HO.

Credit Suisse summarize  how to interpret the results of today's UK elections.

"In terms of how to interpret the results, a Tory majority of 40 seats or higher would represent a validation of market expectations and would likely be consistent with additional tactical GBPUSD strength in the near-term towards the mid-March highs around 1.3340 – especially after the last minute unsettling surprise delivered via the latest polls," CS notes. 

"Conversely, vote outcomes leading to a sub-40 seat majority would prove disappointing relative to market expectations, bringing back memories of the 2017 election, and paving the way for a retreat in GBPUSD back below 1.30 towards the early November weekly lows around 1.2770," CS adds.