Then there's only one direction left to go
The pound's inability to stage a reprieve after the wages report earlier bodes ill for the currency in the bigger picture. The report was overall on the stronger side and gives reason for traders to believe that inflationary pressures are holding up in the UK.
If you take the ex bonus reading, wages grew at its fastest pace in the 3 months to July 2008 and in real terms, it was the fastest wage growth since October 2015. Those are some solid details to back up inflation.
But sadly, while the data here is good it is just not one that the pound needs right now. With the UK economy likely to contract in Q2 and Brexit worries getting deeper, those are the two main concerns that needs to be addressed for the pound to post a meaningful recovery in the bigger picture.
As mentioned earlier, with Johnson and Hunt declaring the Irish backstop "dead" and the EU insisting on no renegotiation to the withdrawal agreement, all there's left is a no-deal Brexit, a general election or a second referendum. Pick your poison.
If the pound does find some bids on position covering over the next few hours, I reckon it'll easily be offered again closer to 1.2500 and at the key hourly moving averages.
