Cable jumps to a six-week high as pound gains extend
Cable breaks above last week’s high of 1.2354 to post a high of 1.2363 on the day currently. That’s the highest level the pair has traded since 29 July as the pound continues to flex its muscles following the more upbeat July GDP report earlier.
There is some minor resistance next around 1.2382 but given the bounce I don’t think that poses much of a threat to buyers as the 1.2500 will be eyed next in terms of a meaningful break higher from here.
I’m still on the skeptical camp with regards to the break higher today. The better-than-expected report is good news in the sense that the UK economy potentially avoids a technical recession for the time being. However, Brexit uncertainty and even a further extension will not do anything to remove all of those worries.
The comparison I made last week to the situation is like how you’d rip off a band aid. The slower you pull it, the more it hurts. That’s the same situation the UK economy is basically in with regards to all of this.
But then, there’s no arguing with the technicals either. As it stands, buyers are firmly in near-term control and a daily close higher as well as a break above 1.2382 will only further solidify that sentiment.