Cable extended losses on Monday to new three-week low at 1.2940, driven by weaker Euro on rising concerns over Italy’s budget deficit, with action of Italian government coming in collision with EU budget rules. In addition, weaker than expected UK Construction spending in September (52.1 vs 52.8f/c and 52.9 prev), further pressured pound. Fresh weakness dipped to the mid-point of thick daily cloud (1.3012/1.2874), with bears looking for bearish signal on close below broken Fibo 50% support at 1.2979, to open way towards key supports at 1.2904 (Fibo 61.8% of 1.2661/1.3297) and 1.2874 (daily cloud base). Oversold slow stochastic turned sideways and warns that bears may take a breather before resuming, but so far without firmer signals. Upticks should stay capped by cloud top to keep bears in play.
Res: 1.2988; 1.3012; 1.3054; 1.3069
Sup: 1.2940; 1.2904; 1.2874; 1.2811
