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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.