Cable falls to session low as focus stays on Tory leadership race culmination tomorrow
The pound softens in the European morning, again...
Cable is down to a low of 1.2479 as the pound slips in early morning trades again with traders having to deal with the prospect of a Boris Johnson leadership.
Johnson is the odds-on favourite to win the Tory leadership race - result to be announced tomorrow - and the view is that he is likely to pursue a no-deal Brexit if he cannot renegotiate something better with European leaders.
Political uncertainty and instability is in part weighing here as well considering the fact that we're likely to see several ministerial resignations - Philip Hammond being one of them - should Johnson make the above clear in his Brexit policy.
The only good news I can see for the pound is that the UK parliament is set to observe a summer recess from 25 July until 3 September so perhaps we'll hear little damaging remarks for the pound during the period.
But at the same time, the clock ticks ever closer to the 31 October deadline and I would expect traders and investors to grow more nervous as time begins to run out. That will definitely show in pound price action over the next few months.
As for cable in the near-term, price now moves below the 200-hour MA (blue line) @ 1.2500 and is looking towards testing the 100-hour MA (red line) @ 1.2469. That will be a key level to watch out for as sellers will regain near-term control on a break below that.