No economic releases of note today for GBP or USD.
Price will trade on risk flows, Brexit polling data (if any is released) and price action.
Despite promising economic releases earlier in the week, including industrial ouput strengthening, Brexit risk sentiment has dragged on Sterling since midweek.
Perhaps due to Brexit concerns, gauges of domestic sentiment such as the RICS house price balance delivered disappointing data on Thursday although some measures of actual performance were better than expected, including Non-EU trade balance.
Meanwhile the USD stabilised after last Friday’s NFP shocker, and benefited from a risk-off flow on Thursday following Chinese CPI missing target. Judging by overnight Nikkei performance this Risk Off attitude will continue on Friday.
The overall result was a bearish Cable, and the same fundamental factors remain in place for today’s trading sessions.
Volatility will rule up to the EU Referendum on June 23 with risk to the downside as dollar bulls regroup eyeing a July or September Fed Hike and an uncertain Brexit outcome deters GBP buyers. Further polls are unlikely to show a significant shift towards a “Remain” result: Cable risk is to the downside.
The bigger picture is a range moving into a wedge, with a long term bearish line of resistance moving across a rising channel. The wedge concludes at just about the time of the scheduled EU referendum and as we know a strong breakout will occur at that time if it has not before.
The monthly M3 pivot held price down and a move to MM1 is implied: this would entail a break below the support line of the rising channel. This is feasible in light of weighing Brexit risk sentiment and a stabilisation and regrouping of dollar bullish sentiment.
The pair is however oversold on most higher time frames, suggesting some support on the current factors.