As a three week rally on Cable has moved into reverse, the pressure has turned back towards a test of 1.2845 support. It is notable that intraday volatility on Cable has picked up this week, with larger daily ranges. The Average True Range of 117 pips has been exceeded in each of the past three sessions now (UK/EU Brexit trade deal negotiations are clear weighing on sentiment). Although newsflow is key, we favour selling into intraday strength for pressure on 1.2845. A closing breach would increase downside momentum for a test of 1.2670. Near term rallies into 1.3000/1.3080 continue to struggle. It is also worth noting now the support of a five month uptrend (which links the lows going back to May), which comes in today at 1.2780. This may be more of a factor next week in reflecting the longer term outlook, especially once the market reacts to what is likely to be an ongoing drag of the EU/UK negotiations.
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