Technical Analysis

Cable flirts with drop below 1.3800 on the session

The pound not getting any love as BOE governor Bailey plays down persistent inflation pressures

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Cable got a decent bounce off 1.3800 yesterday amid dollar strength, moving back up to 1.3830 levels, but that is quickly fading at the moment in a drop to 1.3794.

While the greenback’s solid form this week is in part aiding the drop, the pound didn’t get much help from Bailey brushing aside inflation pressures as temporary here. He also added that the BOE should not “overreact” to growth and inflation conditions for now.

Not quite what you’d want to hear if you’re expecting a formal transition to tapering.

But as mentioned in the earlier post, the Fed has made it easy for everyone else so it isn’t hard to see why Bailey wouldn’t take advantage of that when he can.

In any case, the technicals may be more important for cable at this stage as price flirts with a potential drop below 1.3800. There isn’t much support beyond the figure level through to the double-bottom on 24-25 March and 9-12 April near 1.3670.

The daily close will be pivotal but just be wary of tomorrow’s payrolls as well.

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