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Cable Set To Post 0.80% Decline, Corrective Cycle In Play

GBP
  • After consolidating around 1.2750 overnight, GBPUSD’s initial grind lower in Europe accelerated across the NY crossover on Wednesday in a move that was bolstered by the backdrop of a broadly firmer greenback.
  • Cable’s move lower picked up momentum through last week’s lows with a multitude of lows between 1.2685/90 finally giving way. Stagflationary concerns since last week’s BOE decision continue to temporarily weigh on sterling and it appears a short-term corrective technical cycle may be in play for the pair.
  • Today’s price action confirms an extension of the current bearish cycle and the pair has pierced support at 1.2651, the 20-day EMA, trading all the way down to an intra-day low of 1.2607. It is worth noting that the low was put in around the WMR fix, which could have been associated with value date month end flows, which may be worth monitoring through the end of the week.
  • Overall, the primary uptrend in GBPUSD remains intact. Firm support is at the 50-day EMA, at 1.2539 and initial resistance is 1.2760, the Jun 27 high. Key resistance and the bull trigger remains at 1.2849.
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