Research Team at Societe Generale, suggests that the GBP/USD was trading near 1.39 this morning and brings the March 2009 low of 1.3657 into play. Key Quotes “The 5.5% drop since 1 January marks the worst start to a new year since 2013 when PM Cameron promised to hold a ‘EU in/out’ referendum by the end of 2017 if the Conservatives were re-elected. A break of LT trend support going back to 1985 (1.0520 low, Plaza Accord) reinforces the bearish technical trend. Cable 6m implied volatility spiked to 13.535 but this is still below the 2008 post-Lehman high of 23.09. Annual swings of 25%+ between annual high and low in spot have only occurred three times before: in 1985 (Plaza accord), 1992 (ERM exit) and 2008 (Lehman collapse). Annual changes in GBP/USD have not exceeded 10.6% since 2010 but the widening of the current account deficit since then, i.e. dependence on overseas investment, brings the risk of a GBP undershoot. The fall in UK income from overseas investments from the peak in mid- 2011 has caused the current account deficit to widen, though it has narrowed in recent quarters from a high of 6.2% of GDP in Q414 to 3.7% in Q315. The UK net international investment position, the difference between foreign assets owned by UK residents and UK assets owned by foreign residents showed a net liability of £348.8bn in Q315. Net short GBP IMM positions stabilised at 36,255 contracts which is still more than half of the record 77,738 short positions in June 2013.” For more information, read our latest forex news.