Cable Traded Sideways Despite Moody’s Downgrade of the UK
|S1: $1.3470||R1: $1.3566|
|S2: $1.3354||R2: $1.3594|
|S3: $1.3400||R3: $1.3620|
Cable was largely range-bound either side of the weekend, following Theresa May’s Brexit speech in Florence. Ratings agency Moodys cut the UK’s credit rating from AAA to Aa2 late that afternoon. However, this was seen as being largely symbolic with credit markets having priced many Brexit issues already.
Sterling continues to reject moves through $1.3600. $1.3470 remains an important short-term support, creating the bottom of the current trading range. RSI 14 is unwinding from overbought levels over D1 & H4 time frames. Friday’s COT data showed short US$ positions were growing among hedge funds, who are reducing their sterling shorts at the same time.
Theresa May’s pragmatic speech on Brexit in Florence on Friday seems to have caused further division among the factions in her cabinet. But Cable took her idea of an extended transitional period for the UK after 2019 in its stride. The downgrade to the UK’s credit rating also passed without major incident. UK Q2 GDP and a speech by Mark Carney are the highlights this week.