Cable rises to a session high of 1.2310
The data showed a surprise rebound in services output (most important component of the UK economy) and that may just be enough to circumvent a technical recession this year.
That has seen cable keep up the push higher from 1.2290 to a high of 1.2310 currently where price is running into some near-term resistance. The key level in terms of any upside break from here is to watch the swing region around 1.2340-50.
If price breaks through that, expect cable to take flight towards 1.2500 potentially.
However, as mentioned earlier, a lot of this has to do with the technicals/short covering. I still don’t view the move as being sustainable as long as current Brexit developments continue to go nowhere over the next few days/weeks.
As such, I reckon sellers may add to shorts closer to the swing region above with a tight stop but otherwise, it’s basically a “let it run to 1.25 before coming back in again”.
It’s all about Brexit now and the more cable breaks away from 1.23 it is basically signaling a shift in mood surrounding odds of a no-deal Brexit. I’m one not to be confident that we should discount that risk yet but let’s see what the market says.