Sterling in December is a vol-lovers Heaven and I am expecting the next few weeks to be no different. Cable has felt, for quite some time now, that it’s down the elevator and up the stairs and I suspect that some of the more entrenched macro longs might also get a bit antsy as the holiday season approaches.
Last week’s weekly close below the 100-week MA will not inspire confidence amongst the GBP bulls. 1.3350 has proven to be a bit of a pivot in recent times so I will look selling opportunities there. There isn’t much in the way of strong technical support until the 1.25-1.27 window, another fact which will be lathering the bulls in sweat!
From a fundamental perspective, the short-term outlook for the UK economy and interest-rate cycle isn’t looking a whole lot different to any of the other major economies but any new supply-chain hiccups will definitely affect the GBP more than other currencies. This risk, alongside the volatile Covid landscape, would be enough to convince me to exit GBP longs until early 2022.