BUZZ-COMMENT-Cable's long-term structural decline likely to continue
January 22 (Reuters) - Uncertainty surrounding Trump 2.0 policies should continue to underpin the greenback and put further downward pressure on GBP/USD. Cable has been on a negative trajectory since the 1970s and its path is unlikely to alter if global markets enter a period of turbulence.
Steadfast dollar long positions could well be rewarded with bigger gains, as the greenback is usually attractive in times of uncertainty. That should help to push GBP/USD lower in the months ahead. Last week the speculative long position - derived from net contracts of International Monetary Market speculators in the euro, yen, pound, Swiss franc, Canadian and Australian dollars - has risen to its highest level since April 2024.
FX traders should be aware that since 1971 every Conservative and Labour led government has seen GBP/USD fall over their period of office. Cable is currently down approximately 3.5% since Labour returned to power in July 2024. The expectation is for GBP/USD to eventually slump back below the 1.20 psychological level, half the value it was in August 1971.
For more click on FXBUZ
(Martin Miller is a Reuters market analyst. The views expressed are his own)
((martin.miller@thomsonreuters.com))
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