Richard Perry
Independent Analyst
What a day for sterling yesterday. The initial signs were good, looking to break through the downtrend, but then fundamental events took over as firstly UK employment then the Bank of England Quarterly Inflation Report resulted in a massive sell-off. In fact it was the biggest downside move since 3rd Feb (which saw Cable drop 158 pips from high to low and lose 140 pips on the day close). Cable is now breaking through the key lows from May at $1.6690 and the outlook is under significant pressure once more to the downside. The next real support does not come in until $1.6550 so there is plenty of room for the further declines now the May support has been breached. The RSI is oversold once again but momentum is now so bearish that it is difficult to use this as a positive. Selling into strength seems to be the way to go once more. The intraday chart shows little resistance until $1.6754.
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