Cable accelerated lower in early hours of European session, remaining at the back foot and attempting to extend post-Fed weakness.
Double upside rejection and Thursday’s close below daily cloud base were bearish signals, with stronger dollar after Fed and on expectations of US jobs data upside surprise, keeping sterling pressured.
Adding to the outlook were results of UK local elections, where two major parties suffered heavy losses.
Daily studies maintain bearish momentum and stochastic turned south, with falling 30 SMA capping the action and maintaining pressure (currently at 1.3043).
On the other side, solid supports lay at 1.3011/08 (Fibo 38.2% of 1.2865/1.3102/20SMA reinforced by formation of 2/20SMA bull-cross) and break here would generate fresh bearish signal and risk further easing.
UK Services PMI data are in focus in European session (Apr 50.4 f/c vs 48.9 prev) and strong reading would challenge fresh bears, however, the downside is expected to remain vulnerable if the pair fails to break and close above 30SMA.
US jobs data are key event today (Apr NFP 179K f/c vs 182K Mar and Average Hourly Earnings (Apr 3.3% f/c vs 3.2% Mar) and solid results would further boost dollar and increase pressure on pound. Sustained break of 20SMA would risk extension towards key supports at 1.2960/56 (200SMA/Fibo 61.8% of 1.2865/1.3102).
Res: 1.3043, 1.3080, 1.3102, 1.3157
Sup: 1.3008, 1.2983, 1.2960, 1.2921
