Cable has traded below 1.2300 for the first time since January-20, hitting target 1 from my post of February 6th for a gain of 164 pips. The pound is also trading at 12-day lows versus the euro, and GBPJPY has taken a tumble after earlier logging a three-session high. The underperformance follows a sub-forecast UK manufacturing PMI reading, which outweighed forecast beating mortgage and consumer lending data from the BoE. Cable has traded lower for four consecutive sessions now, breaching and closing below both the 20- and 50-day moving averages on the way. The 14-day relative strength index has also remained above the 30.0 “oversold” threshold, in theory suggesting that there may be more scope for the decline. There are more risks to the downside into next month’s commencement of exit negotiations between the UK and the EU and associated risk of a new Scottish independence referendum, target 2 remains at 1.2135.
The USD has been the strongest currency so far today following Presidents Trump’s State of the Union address and the not to be forgotten raft of hawkish Fedspeak yesterday. Principally the significance of NY Fed president Dudley and the often dovish SF president Williams becoming much more hawk like. The greenbacks rally today also helped the NZDUSD trade from February 9th also hit target 1 at 0.7120 for a gain of 95 pips, target 2 remains at 0.7020. The two long dollar trades had a total net gain of 259 pips.
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