Cable sags after touching 1.5800 for second day.
I wrote yesterday about why to avoid picking a top in cable and that remains in play. One of the reasons why is that tops and bottoms are rarely V-shaped and GBP/USD proved that today with a choppy move around the top.
It's still too early to put on cable shorts with any kind of size -- especially after the weak Friday US data. But there are reasons for dipping into the trade.
1) Technicals for a top are a bit better.
There is a minor double top on the chart.
2) Cable sagged Friday even with the US dollar under pressure
The US dollar has been unable to gain ground after falling on soft consumer sentiment -- except against cable. A push to 1.5800 has been rejected with the pair falling 50 pips since the top.
3) UK data risks
On Tuesday, the UK CPI is due and core prices are expected to rise 1.0% y/y. That's followed by the BOE minutes on Wednesday and retail sales on Thursday. Cable is rallying on a weaker US economy and an election. Anyone who bought for those reasons will be looking to cover in case the data is soft.