Impressive rebound in the pound as it recovers to unchanged

Cable recovers to flat on the day

The final trading day of the month is a bad time to try and make sense of market moves and cable today is one of those examples.

The pound dropped to 1.2850 from 1.2925 in the early part of London trading but has completed the round trip in the past few hours and is back at unchanged on the day.

One of the things that hurt the pound was a speech from the Bank of England's Michael Sanders. He's a hawk but his rhetoric was less-than-hawkish, at least by his standards. Still, it was no reason to dump the pound as far as it fell.

To be clear, a big part of the 75-pip rebound story today is US dollar weakness, with many expecting a USD decline on Friday because of things like this. USD/JPY is down 50 pips from the highs, while AUD/USD and EUR/USD are up 80 pips.

So maybe it's no time to make a big deal out of a rebound but the chart is flashing a potential reversal pattern.

There are noted offers in the 1.2930-35 range and at 1.2950-55 followed by 1.2980.

If cable can close above 1.2980 or 1.3000 on Friday that would flash a much more convincing signal and make a good argument for a return to 1.3200. It will depend on nonfarm payrolls and the latest Brexit drama.