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Can Cable Power On?
The currency market has concluded that Brexit is a non event, and as a result cable has rallied through both the 1.4500 and 1.4600 level as traders squeezed the shorts mercilessly. But is the consensus being too complacent?
The latest ICM poll shows the Leave vote up by 2% and as we noted earlier today, “One of the more difficult aspects of political referenda such as these is that people often lie to pollsters about their true intentions, especially if those intentions are aligned against the conventional view. In short many Britons may state one opinion for the pollsters while doing quite the opposite in the privacy of the booth.
Therefore the risks of Brexit may have diminished, but they have not fully disappeared and the recent rally in the pound could quickly change course if market senses any shift towards the Leave camp. Meanwhile the 1.4600 figure could prove to be stiffer resistance as it carries some overhang from February highs. Having had such a strong rally, cable is due for a pause and with all the good news on the Leave side now fully priced in the upside may be limited.”
For now the 1.4700 level should serve as stiff resistance while 1.4500 is the new support.