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Alleviating Oversold Condition Could Make for More Attractive Short Entries

GBP
  • Corrective backdrop persists in GBP/USD as markets continue to cover shorts and consolidate the acute weakness at the tail-end of September. GBP/USD up to new daily highs of 1.2217 in recent trade amid light pre-data volumes. Futures indicate activity in GBP sits around 30% below average for this time of day, with markets on the sidelines pre-NFP.
  • Overnight vols were bumped higher to 13.5 points Thursday as the contract captured today's NFP, clearing the equivalent vol premium for the August release on Sept 1st, which crested at 12.5 points.
  • Today's high is just shy of 1.2220, Monday's best level, clearance above which opens 1.2272 for any recovery. The pair's corrective recovery off the October low has allowed the technically oversold condition to alleviate via the 14d RSI, potentially allowing for more attractive short entries in the event of a resumption of the USD uptrend.

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