Cable eating away at offers to trade back above the Sunday night open

With the news over the weekend that the Scottish independence vote has moved in favor of Scotland leaving the UK, sterling opened on Sunday evening significantly lower then Fridays close, with GBPUSD opening some 160 pips lower.

The market open and Monday’s trading left little in the way of a rest bight for cable with the market taking the cross as low as 1.6102 just above the psychological 1.61 level. Since then, buyers have come in and shorts have been taking profits to take the pair back above the Sunday open of 1.6165, the Asian high is the next technical hurdle for buyers to target coming in at 1.6232 along with the psychological 1.62.

A break above there and we start to see the gap closed with last Fridays low of 1.6276 coming into play and then the 1.6327 which is last Fridays closing price. Through there is last Fridays post NFP high coming in at 1.6340.

With 10 days still to go we expect further levels of volatility as any hint of a break up likely to weigh on GBP across the board, should we see a move back in favor of Scotland staying within the UK expect GBP strength but it is likely we will be waiting for next Thursdays vote before a clear trend and direction takes hold.

Keep an eye also on UK data out tomorrow at 9.30 BST with BoE head Mark Carney also talking.