Cable has been trading heavily so far today though has so far remained above yesterday’s four-and-a-half-month low at 1.3451. The new low made this the fifth consecutive week of declines, although downside momentum has been abating, with a rising 14-day RSI momentum indicator pointing to a possible flattening out in the bear trend (based on historical tendencies in price trends). The pound has also come off versus the euro yen, after rising against these currencies in recent sessions. A solid UK labour report, yesterday, helped give the pound a lift, though remarks by BoE Deputy Governor Broadbent in an interview yesterday, which have been getting a fresh airing today, weren’t so upbeat and didn’t give any signal regarding policy. Broadbent described the UK economy as being amidst a slowdown in growth and wages comparable to the late 19th century, when productivity gains from the steam era had peaked but the age of electricity had not yet started, with Broadbent likening steam power to digitization and electricity to (possibly) artificial intelligence. However, his major faux pas was referring to the UK economy as being in a “menopausal” state or stage. The more central bankers try to provide the infamous forward guidance the more they seem to trip them selves up.
There are still calls for a 25 bp hike in the repo rate at the August MPC meeting, though overall I still take a bearish view of Cable in the long term given comparatively strong Fed tightening expectations. Cable has resistance is at 1.3545-50, and support at 1.3451-55. Intra-day the H1 Crossing EMA Strategy has produced 3 positions so far today for a net gain of 18 pips with a further position from the 13;00 candle still open.
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Senior Market Analyst
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