GBP/USD – Has the Pound Flipped?

GBP/USD – Has the Pound Flipped?

Chart Of The Day

After a relentless rally of nearly 1000 points cable looks like it may have reached a near term high. The rally in the pair has been driven purely by political rather than economic factors as the the relief over the seeming support for the Remain vote trumped all other considerations.

Yet Brexit whether it happens or not, has already taken its toll on the UK economy which has slowed noticeably over the past few months. Today’s massive miss in UK PMI Manufacturing numbers which printed at 49.2 versus 51.2 forecast, may have been a wake up call to the market that the UK economy is tipping into a recession.

This week the calendar brings Construction PMI and most importantly Services PMI both of which could show a further deterioration of conditions. Cable has carved out a nasty shooting star on the charts which often indicative of market turns and if the eco data continues to disappoint the pair could quickly tumble towards the 1.4400 mark as the week proceeds.

GBP/USD – Can Pound Carry On?

GBP/USD – Can Pound Carry On?

Chart Of The Day

It looks like Brexit isn’t happening. At least that’s what the charts are showing us as cable continues to rally for the second day in a row putting in higher low and challenging the 1.4400-1.4500 resistance area. Although the actual vote isn’t scheduled until June, the currency markets appears to have have up its mind that the Leave campaign just doesn’t have enough juice to threaten the status quo.

Things can of course change rapidly and cable can once again come under assault, but at least for now the pair appears to have found a sustainable bottom above the 1.4000 level and looks to want to squeeze higher towards key resistance at 1.4500. With attention slightly off politics for now, the market may focus on macro data instead and to that end tomorrows UK labor numbers could be key to any further upside action. The primary focus will be on wages. If those show any signs of increase cable could quickly see 1.4500 in days ahead.