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The late-US low in cable has given way and so it’s a new post-post-Truss low with the pair shaving off 33 pips already.
There’s a chance only one UK Conservative gets the support of 100 MPs on Monday and is acclaimed as PM, so that’s the date to watch. If it’s an acclimation, that would remove some of the drama around the leadership, though it might raise other questions about democratic institutions.
Otherwise we’re headed to another leadership contest. The problem with that is it will entail more promises to Conservative members and I don’t think the winning formula will be austerity.
The Bank of England rate decision on November 3 is also a major risk.
In terms of the daily chart, the uptrend since the September low broke yesterday but I’d like to see 1.1152 cracked to confirm it. Below that, the 1.1000 level and 1.0924 low from Oct 12 offer some solid short-term support.
A big problem for the pound is that the US dollar is a wrecking ball at the moment and the bond market continues to flash warnings signs. If that morphs into another rout in equities (and today’s price action wasn’t constructive), then the pound could be right back down to 1.04.
In short, they’re all out of money and ideas in Britain.