Cable proving tricky to trade in current environment
Obviously the dominant influence on the GBP at the moment is coming from EUR/GBP, where we are seeing a big unwinding of long-term short positions. Macro players are at least moving to a neutral EUR position, and this is enough to cause a big move in the market.
Cable is stuck in a holding play near 1.6000 and there are plenty of rumours about big buyers and sellers in the market. Risk-reward would seem to favour buying near 1.5960/70 with a tightish stops below 1.5925. There’s also talk of large structural stops below 1.5900 and if they go off, they could be good for a 150/200 pip clean-out, so be wary on the downside.
EUR/GBP is headed for .8800 but it won’t happen in a straight line.