Pound might fall to 1.1341 in 2017, Rabobank says

The pound resumed its move lower versus the US dollar in late-morning trading following the eruption in volatility seen during Asian trading hours, amid reports that the Bank of England was "investigating" the reasons behind what most commentators had dubbed a 'flash crash' in the currency.

As of 1124 BST cable was off by 2.34% to 1.2320.

For Piotr Matys at Rabobank, the so-called 'technical' picture for cable pointed to 1.1341 as a possible downside target for 2017.

That level marked the 76.4% Fibonacci retracement of its 2007-2009 fall, Matys said.

The main fundamental driver of the exchange rate however would be the negotiations between the UK and the rest of the European Union, he added.

"Lastly, it is worth recalling that GBP/USD fell almost 30% over six months after the UK was forced to exit the ERM2 in September 1992 and plummeted 36% in 2007-2009. At the time of writing cable is trading “just” 17% below the pre-Brexit high."

In a separate note, analysts at Rabobank lowered their mid-2017 forecast for cable to 1.18.