Cable finding weak support
Cable is finding some short-term support in the 1.2580/00 area, but at the moment is struggling for any real direction. This is hardly surprising given the fact that the economic arguments have been hi-jacked by bickering partisan interests, with even the hitherto respected Bank of England succumbing to hand-wringing hysteria of the sort which can only leave a permanent stain on the credibility of Governor (and former Goldman Sachs man), Mark Carney. The truth is, the UK Government has now decided that dithering about for an entire 2 ½ years after the referendum has not produced any tangible results, and that with just over 3 months until the UK is scheduled to leave the EU, that now is the time to start looking busy. Given the significant and ongoing level of political incompetence that has been the hallmark of the Government’s handling of Brexit the wonder is that cable is still above par. For this reason we remain bearish on Sterling, and a close below short-term support at 1.2450 will confirm this view. We feel that any rallies are simply an opportunity to establish (or add to) shorts, as the likelihood of Santa delivering a big sack full of common sense to the Government looks remote, and even if that did happen they’d probably find a way to throw it out with the leftover turkey.