The pair is trading at the lows for the day now, with the dollar holding in a decent spot in trading today. Only the kiwi can really have anything to shout about against the dollar and that owes to higher-than-expected inflation data as noted here. As for the pound, the recent relief bounce is looking to fade now in a push back to 1.1260 against the dollar.
As the UK gilts crisis dies down, the focus for the currency turns towards the economic outlook and BOE outlook again. As for politics, Truss is facing daunting odds to stay in charge as prime minister. In a bizarre twist, the latest YouGov Tory members poll show that Boris Johnson is the top choice to replace Truss. I mean, what else can you say to that.
Going back to the chart above, cable is now being pressured close to the 100-hour moving average (red line) and a fall below that will see the near-term bias turn more neutral instead. The 1.1200 mark and the 200-hour moving average (blue line) will be the next area to watch for support and a further drop will exacerbate any further decline towards 1.1000 again.
Outside of politics, the pound is also struggling for comfort as the BOE came out to deny that it was going to delay QT – which is scheduled for 31 October. That’s not offering too much assurance for gilts as well, which are still at elevated levels even though newly appointed UK finance minister, Jeremy Hunt, ripped up the mini-budget yesterday.
On the balance of things, it’s still tough to look at the pound with much confidence and the daily chart also points to some technical resistance via a trendline from the recent highs:
That suggests that the technicals are also supporting a consideration for limited relief in the latest bounce for the pound, adding to the already bleak fundamental outlook.
