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The dollar is sitting firmer across the board once again and we are now seeing cable extend its drop to fresh lows near 1.2300 – its lowest since June 2020. The pound didn’t get much reprieve from the BOE yesterday as the central bank painted a rather dire outlook of the UK economy and that has been enough to trigger additional downside pressure for the currency.
Add to the fact that the dollar is staging a solid rebound after its post-FOMC drop, it’s a double whammy for cable.
The sharp drop in recent weeks is nothing to scoff at and while there might be signs pointing to overselling, the chart above dictates that there isn’t much support standing in the way of a drop towards 1.2000 next.
And the fundamentals just don’t support any sustainable bounce at the moment, so it isn’t wise to go try catching the falling knife.