Cable daily close at 1.2845 is lowest in more than 30 years
The break below the August low on Monday set the stage for the worst daily close in GBP/USD in a generation.
The finishing print was the lowest since 1985.
The lone major support for the pound is now 1.2798. That was the intraday low on July 6 but on that day the pair managed to rebound to a close at 1.2931. The previous low close in the cycle came on August 15 when the pair finished the day at 1.2880.
What's especially worrisome is that the decline came on news that was only moderately bad. PM Theresa May confirmed that Article 50 will be triggered in the first quarter of 2017 but that's not a big surprise. It was rumored and semi-leaked several times before it was confirmed.
To me, the sharp decline on news that should have been largely priced in points to a market that has no appetite for buying GBP until the Brexit picture clears. It suggests the market is entirely distrustful of a series of solid data releases in the past 8 weeks and expects economic weakness in the months ahead.
It's at times like this that a brutal washout can hit and with the July low nearby, it may come sooner rather than later.
