Cable is probably the most-interesting chart on my radar at the moment.
It spent nearly two months in a 200-pip range from roughly 1.2600 to 1.2800. And it was a volatile period for broader markets with the dollar generally strengthening but that seemingly balanced out in this pair by risk assets improving. The Fed grew incrementally more hawkish (less dovish?) but the Bank of England matched it despite weaker domestic fundamentals.
The pair was testing the top of the range late last week when the bottom fell out on a hawkish Powell and strong non-farm payrolls. It looked to be a clean break and follow-through down to support at the December lows.
However the dollar sold off broadly today and this pair rebounded to the bottom of the range (or in the range depending how you look at it). That raises a chance that it was a false breakout or the establishment of a a wider 300-pip range down to 1.2500.
For now, I think it's a classic re-test of the old range that should resolve lower but it will need some help. Eyes are on the US side of the equation this week with a pair of important Treasury auctions in the next two days (10s and 30s) along with CPI benchmark revisions. That could set a broader US dollar tone and finally give this pair some life.
