Cable breaks out
Cable is at the highest level since May 7th, which isn't quite technically a seven-month high but that's splitting hairs.
The break higher is technical on the face of it. A bull flag pattern broke to the upside this week and continued through the October high to run stops in a relatively quick move. With the extra 14 pips to the upside today in Asia, that's five days of gains.
However fundamentals are at play too. Cable struggled last week as Labour found some momentum in polls to close the gap to as little as 7 points. However in the past few days that momentum has stalled and they appear to have hit some kind of ceiling. At the same time, Corbyn is running out of time with the election now only 8 days away.
Nothing is certain in 21st century elections but Boris Johnson is going to present his plans for the first 100 days tomorrow and it's starting to feel like a long coronation.
I think the momentum we're seeing today continues until election night but I expect it to stall at 1.3200; or (less likely)1.34. UK traders have been burned badly twice in the past few years by the polls and jitters will kick in.
If it all unfolds as expected, I think the pound is going to surprise a few people with how strong it is. There's some pent-up demand in the UK and Johnson is going to deliver some stimulus so the high 1.30s are in play.
