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Market Happy to Sell Further Into Oversold Conditions

GBP
  • One way traffic in GBP/USD continues headed into NY hours, with GBP/USD printing a new low of 1.2441 - reflecting the persistent strength of the USD as the DXY hits a new higher high for the fifth consecutive session.
  • Needless to say the options market is taking note, with front-month risk reversals extending the downtick to print 2.3 points in favour of puts - the lowest level since early March and the initial invasion of Ukraine.
  • As flagged earlier this morning, support in Cable is seen further out to 1.2423 2.236 proj of the Mar 23 - Apr13 - 14 price swing. This price action continues to show a market happy to sell further into oversold conditions, with the 14d RSI now at 18 points and a new cycle low.
  • GBP is now the second most undervalued currency in G10 on a BEER model basis, with just JPY seen below:

MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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