Cable hits record low and eyes parity, as conditions continue to worsen
British pound fell to a record low vs dollar in Asian session on Monday, in extension of last Friday’s sharp fall, when the pair was down 3.6% for the day in the biggest daily drop since 10 Nov 2021.
Cable spiked through 1985 low at 1.0520 to hit new all-time low at 1.0348, deflated by strong risk aversion on growing uncertainty and signals that the Fed will remain in strong hawkish mode, while confidence in Britain’s plan to stabilize the economy by lowering taxes and increasing borrowing, started to fade, adding to prevailing negative sentiment.
Although the cable bounced back to 1.07 zone in early European trading, as traders collected some profits on signals from deeply oversold daily studies, overall structure remains bearish, as the pair is pressured by deteriorating fundamentals and negative technical studies.
Cable fell 5% last week and is on track for another strong monthly fall (the biggest monthly loss since June 2016 – the post-Brexit fall).
We look for sustained break below 1985 low to signal bearish continuation, as p parity level already came in focus.
Broken psychological 1.10 support reverted to solid resistance, reinforced by falling daily Tenkan-sen, which should ideally cap extended upticks.
Res: 1.0845; 1.0914; 1.1000; 1.1211
Sup: 1.0600; 1.0520; 1.0348; 1.0200