Following the events in the UK and Europe yesterday, investors once again showed a clear preference to buy US dollars over other major currencies. The cable downtrend resumed sooner than we expected though this is still in keeping with our medium term view of a return to 1.4800/50 (lows of the year) and potentially beyond. The more immediate focus though is on price action around NFP and EUR/USD as the market is approaching the base of a year-long topping pattern near 1.2765/1.2800. This is a target for the time being, though a close below would likely suggest a more aggressively bearish scenario, especially as US yields are getting comfortable at higher levels.
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Barclays