There has been some decent selling over the last 48 hours in the cable close to the 1.58 region and this is likely to have a short-term effect. Sterling is in demand again on the crosses but if USD/JPY breaks higher, or if AUD/USD and EUR/USD break lower, it will be difficult for the cable to rally; at best it will hold its ground.
I sold 1/2 my cable position last night as I still feel there is the possibility of an exhaustive sell-off towards 1.5300. I’m happy to re-load on dips and trade whatever the market gives me. The hourly picture looks a bit toppy to me and as 1.58 is growing in importance, I may even square up on another failure there and content myself with the GBP/JPY longs for now. Let’s see what happens.
