Cable was slightly higher in early trading on Tuesday, consolidating above new three-week low at 1.2844, posted after Monday’s 0.57% fall, driven by signs of UK economy’s slowdown on downbeat UK Q$ GDP data.
Surge and close well below former pivotal supports at 1.29 zone generated bearish signal.
Broken 100SMA (1.2890) caps today’s action, maintaining bearish bias as Monday’s long bearish daily candle weighs.
Rising bearish momentum adds to negative outlook, however, oversold stochastic may signal extended consolidation ahead of next significant supports at 1.2807 (50% retracement of 1.2397/1.3217 / 55SMA) and 1.2786 (daily cloud top).
Focus turns towards UK PM May’s address to lawmakers, in attempt to convince them to back her divorce plan and force the EU to accept changes to the deal, to avoid disorderly Brexit, which looks for now as likely scenario.
The BoE Governor Carney is also due to speak later today, with downbeat comments expected in the markets.
Sterling could accelerate towards 1.27 zone (Fibo 61.8% of 1.2397/1.3217) on negative response from lawmakers and dovish stance from Carney that would further sour already negative sentiment.
Broken 1.29 zone now marks solid resistance which is expected to ideally cap and keep bears intact.
Only stronger bullish acceleration and close above 20SMA (1.2996) and 200SMA (1.3023) would neutralize bears.
Res: 1.2890, 1.2915, 1.2942, 1.2996
Sup: 1.2832, 1.2807, 1.2786, 1.2710
