By Justin McQueen

Apr 2 (Reuters) - Risk assets are following the wartime playbook, heading into the weekend offered as markets trim exposure and layer on geopolitical risk hedges. In FX, that has led to a firmer USD, briefly dragging cable through 1.32. Still a headline-driven tape though, so conditions remain skittish and conviction light.

Oil remains the real-time geo barometer, which is not far from the $120 swing high. This level is significant and a clean topside break would signal a regime where market psychology flips from supply shock to demand shock narrative.

It's worth noting that in 2022, the $139 swing high in Brent was never taken out. A break of $120 would be key difference from 2022 and likely the catalyst for the next leg lower in risk. For GBP, weakness would likely show up against both USD and JPY.

One thing to keep an eye on is that GBP is rolling into its seasonally strongest window, with April historically the best month for the currency. The usual caveats apply, seasonals should not be used in isolation, especially in this environment. But if and when the geo noise fades and the dust settles, it is an informative tailwind for any short-term mean-reversion.
Avg GBP perf


Average SPX day


(stin McQueen is a Reuters market analyst. (The views expressed are his own) ((Email: ))