Trading has slowed considerably in cable after the hectic start to the day, the pairing presently at 1.6165.
Cable is trying to steady, but it’s a little hard to envision a meaningful rally at the present time. The proximity of Wednesdays Bank of England rate decision will serve as notable event risk for sterling. The market is now convinced it will be seeing an early cut in the deposit rate paid to banks on their BOE reserve holdings and further QE is seen as pretty much a done deal, just a case of exactly when.
The only slight plus for sterling is that the above two scenarios are on their way to being discounted, although one would suspect not fully, quite yet.
The BOE in it’s latest quarterly bulletin has said sterling’s long-run sustainable exchange rate may have fallen due to an increased focus on UK’s economic imbalances following the global crisis. Yer think?
Supports now 1.6135, 1.6110/15 and 1.6080/85, resistance 1.6190/00 and 1.6215/20.
