Cable falls to lowest since Sept 14
The pound is lower for the third consecutive day and nearly the entire pop from the BOE hint at a rate hike has faded.
Still, the market is pricing in an 81.6% chance of a hike on Nov 2, which is at a cycle high.
What I think happened here is that the BOE sparked a squeeze on a crowded short position but after hitting 1.36, the Brexit bears began to rebuild.
There is a great deal of conviction that the UK economy is doomed to struggle and whenever the economic data shows a hint of trouble, the pound is sold hard, like we've seen this week.
Technically, the fall back below the August high is worrisome but there are a few support levels still in place, including the 50% retracement of the rally since August, the closing high in August and the mid-September retracement.
Ultimately, it's very tough to fight a central bank and I see better value in buying here because Carney is either going to hike in November or very clearly signal a coming hike in December.
