Chief FX Strategist at Scotiabank Shaun Osborne believes Cable could accelerate its downside and attempt another test of the psychological 1.30 handle.
“Sterling is down around a cent from levels prevailing around the open yesterday. UK CPI pushed higher to 3.0% y/y in Sep, as expected, but BoE policy makers’ remarks to UK lawmakers did not provide any more clarity on prospects for a rate increase next month. Gov Carney repeated recent comments suggesting that a rate hike May be appropriate in the coming months”, which was perhaps not as decisive as GBP bulls would have preferred”.
“Cable looks soft on the short- and medium-term charts following the losses that have accumulated through the European morning session. Spot losses below the 1.3210 area (40-day MA at 13211) may accelerate below short-term support at 1.3190 and point to a renewed test of the 1.30 area”.