Cable sits at the lows for the day as the pound gets battered yet again
The next key support level will be from the March 2017 low @ 1.2110 and that could potentially offer some relief for the pound on short covering.
However, the sentiment to drive the currency lower remains overwhelming and at this stage a move towards 1.2000 certainly cannot be ruled out.
It’s been a straightforward drop for the quid since the weekend – as no-deal Brexit rumblings intensify – and fundamentals continue to dictate that there isn’t any plausible reason for a bounce unless something changes on the Brexit front.
The only advice I have is that one should never try catching a falling knife when they see one. Any rebound will come when it comes and in such instances, it’s better to be late to hop onto the train than to be early and potentially get crushed by it.
With such a sharp decline over the past few sessions, be wary of any dead cat bounces near key support levels. After all, positioning and market consensus is looking rather vulnerable for sellers as short positions continue to build:
- The pound’s only silver lining may not be enough to keep it afloat in the short-term
- Options market favouring more downside for the pound ahead of Brexit deadline