Cable eyes key help stage as greenback momentum continues to run

The pair noticed a little bit of a bounce again the day after the US election outcome however that was arrested nearer to the 1.3000 stage alongside the 100-day shifting common (crimson line) final week. Since then, sellers are again in management with worth protecting decrease once more right now and poised for a 3rd straight day of declines.

The autumn now sees GBP/USD right down to its lowest ranges since August and is eyeing a take a look at of key help. The 200-day shifting common (blue line) is up subsequent at round 1.2817. Cable has not traded beneath each its key day by day shifting averages since Might. A break decrease right here will solidify a extra bearish bias within the pair with the greenback trying to prolong its post-election run.

If the 200-day shifting common and 1.2800 stage breaks, the August lows round 1.2664-72 shall be eyed subsequent to the draw back.

As issues stand, it is all concerning the momentum play within the post-election interval. The greenback continues to be favoured and even should you take a look at it from a central financial institution perspective, additionally it is the case.

Markets have priced in ~87% odds of a 25 bps fee minimize by the Fed for December. In the meantime, the percentages present a ~75% likelihood of the BOE holding its financial institution fee unchanged. If the previous is to flip to being a maintain choice or the latter flipping to be a fee minimize choice, both of that can be a push issue for GBP/USD to nudge decrease.

So, therein lies the stability of dangers of the elemental aspect of issues. And we’ll must weigh that up alongside the post-election greenback momentum in addition to the technical issues above. In brief, the stability of dangers proceed to favour extra draw back in cable for now.

This text was written by Justin Low at www.ubaidahsan.com.



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