Richard Perry
Independent Analyst
GBP/USD
Cable is still being flung around by broad market sentiment (impacting on USD, where yesterday’s improvement drove renewed USD selling and therefore a Cable rebound) along with Brexit trade talks (impacting on GBP outlook). Both these factors are still live today and as such the outlook is uncertain. After Tuesday’s key breakdown below 1.3000 and intraday rally into the close yesterday has formed a bullish “hammer” candlestick. This is a recovery candle, but given the uncertainty of the newsflow, it is a difficult signal to implicitly trust right now. The technical outlook has been significantly harmed by the decisive break below 1.2980/1.3000 support. There is now a band of overhead supply between 1.2980/1.3055 whilst an eight day downtrend falls at 1.3130 today. Given the deterioration in momentum, we are cautious of thinking that a bull hammer just turns the market back into positive mode once more. At the least, a closing move above 1.3055 is needed now. The newsflow will continue to be a key driver of Cable (and you can add the associated reaction to the ECB decision into the mix too). Yesterday’s low at 1.2880 will grow in importance as support now.
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