The pound has settled following its recent two-week period of underperformance. The Fed’s less hawkish than anticipated guidance has given Cable a prop. Cable logged a five-week low at 1.2945 ahead of the Fed’s announcement yesterday before vaulting over 1.3050, but sterling is still down by an average 1.8% versus the G3 currencies on a week-on-week comparison. The pound is also down by an average 19.9% versus the G3 currencies on a year-on-year basis.
Cable resistance is at 1.3154-55 and 1.3189-90, levels which encompass a triple head of three-week trend resistance and the 20- and 50-day moving averages and the Parabolic SAR remains negative. Declining business investment in the face of protracted Brexit uncertainties suggests that sterling will remain biased lower into quarter four and 2017. However, in the shorter term daily candle the Tweezer Bottom on Tuesday (September 20) suggest some further strength against the longer term down trend. Should the 1.3070 level be breached and broken on the Daily candle then Target 1 at 1.3150 is a possibility along with a run back to Target 2 at 1.3300 once resistance at 1.3190-1.3200 area is overcome.
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