GBP/USD has risen in every April since 2005
The above shows the seasonal pattern over the last ten years and in April this year it is currently down by 0.46%. The move has a lot to do with the data points released last week, as poor wage growth, inflation, and retail sales figures prompted a massive turnaround in sentiment ahead of the BOE's May meeting.
As mentioned earlier, the OIS market had priced in over 95% probability of a rate hike in May ahead of those data releases and those expectations have been flushed out - with the probability now at 50.7%.
From a technical perspective, the pain in cable could just be the beginning. The drop today sees it fall below the month's low posted on 5 April @ 1.3966. But more importantly is the drop below the 30 January low of 1.3980, specifically a daily close below it.
And the pair looks quite certain at the moment to achieve that. It is trading near the lows currently at 1.3953 - the low today was 1.3943 - and momentum is still clearly with the sellers at the moment with the dollar bid across the board.
A daily close below the 30 January low paves the way for a test of the 100-day MA @ 1.3851. Though there are a couple of support levels in the way (dotted lines), it's difficult to see them standing in the way as the pair slides further.
Nearby, there is also support from the 61.8 retracement level @ 1.3804. So this will be the region where buyers will have a keen interest to defend the pair.
But for now, things look set to continue unless BOE speakers start to change the outlook for a May rate hike during the week.
They will be out in force this week, so if there's ever a time for them to correct market expectations, this will be it. Otherwise, the lack of reprieve and direction will only add to current jitters in sterling - particularly when UK PM May is struggling to push through with her plans to leave the EU customs union (House of Commons set to vote against her as early as next month).
The bad news for cable is that May doesn't look like a good month for the pair based on seasonal pattern, but then again if it broke the April pattern maybe it'll do the same for May, eh?
