GBP snapped a five-day slide against the dollar - BBH

Research Team at BBH notes that the Sterling snapped a five-day slide against the dollar as it’s not just Brexit, which has not been particularly helpful as the House of Lords approved an amendment to the bill (protecting the rights of EU citizen in the UK).  

Key Quotes

“Sterling is not immune from the same forces that are weighing on other major currencies, the rising interest premium offered by the US.  In both two- and 10-year tenors, the US premium is at new extremes.  The UK's PMIs for February were disappointing and pointed to a moderation in the economy in Q1. The composite was 53.8 compared with a 55.6 monthly average in Q4 16.”

“Unlike the euro and yen, sterling did break out of its range, and since it took out the $1.24 floor, it has not looked back.  New lows were recorded before the weekend near $1.2215.  It closed below the lower Bollinger Band two consecutive sessions before edging back into it before the weekend.   It is true that sometimes the Bollinger Band moves to prices rather than prices moving to the Bollinger Band, but it illustrates that the short-term market may be stretched.  Sterling's downside momentum seemed to stall after meeting the 61.8% retracement objective of the recovery since the dip below $1.20 in January, which came in near $1.2260.  The old floor at $1.24 now becomes important resistance, though, before it, we suspect a recovery from the current stretched condition will be more limited.”