Cable trades steadily around 1.2160-70 so far today
The pair is trading near unchanged levels as the pound is holding steady after two days of declines to kick start the week. The main focus of markets today is the Fed decision and that is helping to take some heat off the pound for the time being.
Yesterday, cable made a low of 1.2119 as price closed in on the March 2017 support at 1.2110 before bouncing back to close at 1.2160 levels.
But looking at the whole of July, it has been a rough month for the pound with the quid having fallen by more than 4% against the dollar. The next biggest loser is the euro, which is just about 2% weaker against the greenback.
Looking ahead, August may see a period of choppy price action for the pound as traders want to build on the no-deal Brexit rhetoric set out by Boris Johnson but the issue here is that the UK parliament will be on break up until September.
Hence, any further ramp up in the rhetoric and potential complications will only come about when the summer recess ends and that’s when the Brexit focus will be renewed. As it stands, there’s still good reason to believe the pound will head towards the post-Brexit referendum lows but patience will be key in the mean time.
For today, the Fed decision is the main focus so let’s take one step at a time.