GBP/USD down 138 pips to 1.4013

Cable is at session lows as it limps to the finish line in the second day of post-referendum announcement trading. Yesterday GBP bounced after heavy selling but it hasn't been able to entice any buyers today.

The economic calendar is quiet tomorrow but referendum polls are a daily hazard and will drive intraday moves in GBP for the next four months.

Technically, cable is in a world of trouble. Aside from oversold indications, there is little supporting the pair except the psychological barrier at 1.4000.

I think the risk of a Brexit is vastly overstated but it's way too soon to fight the momentum. The technicals point to more deterioration down to the 1.3500 level. That could even be broken if the US economy shows signs of picking up and the Fed rekindles rate hike talk.

In the immediate term, the two trades I like are selling a 50-60 pip bounce and/or selling a break of 1.40 but only if it comes in European trading. The chance of whipsaws in thin Asian trading is too high.