Sterling may retest 2020 low after 4.5% drop in August
Cable dips below 1.16 handle in early Thursday, hitting the lowest levels in 29 months, pressured by fading risk appetite on darkening economic outlook and strong dollar, driven by expectations for further aggressive stance of the US Federal Reserve.
Near-term action showed a little reaction on slightly better than expected UK housing data and will look for today’s release of US manufacturing PMI data for further signals, while larger picture sees ECB, BOE and Fed policy meetings later this month as key events which could influence pound’s performance.
Sterling was down 4.5% in August, in the biggest monthly loss since June 2016 post-Brexit vote drop and is on track for the third consecutive weekly fall that adds to negative outlook, along with bearish technical studies on all larger timeframes.
Bears eye pandemic low at 1.1410 (Mar 2020), but may face significant headwinds on approach as studies are oversold on daily, weekly and monthly chart.
In current environment, a limited correction would be likely scenario, with upticks to provide better levels to re-join firmly bearish market.
Res: 1.1634; 1.1693; 1.1737; 1.1760
Sup: 1.1556; 1.1493; 1.1430; 1.1410