Cable is in directionless mode in early Tuesday’s trading, holding within tight range between converging 20/10SMA’s (1.2692/1.2671 respectively) and awaiting fresh signals from UK jobs/earnings data today.
Monday’s close in red and marginally below Fibo support at 1.2685 (38.2% of 1.2559/1.2762) after recovery attempts stalled on Friday, generated initial signal of reversal, which requires sustained break below 10SMA for confirmation.
Daily studies are mixed, as bullish momentum rises, stochastic heads south, while RSI is neutral.
Overall sentiment is negative due to Brexit concerns, with tensions rising over the election of new UK Prime Minister between ten candidates.
UK earnings / jobs data could hurt pound if May figures disappoint, as forecasts are already below previous month’s levels.
Expectations show significant fall in new employment, though jobless claims are seen slightly better, with unemployment rate expected to stay unchanged at 3.8%.
Focus turns on UK earnings as key indicator (May 3.0% f/c vs 3.2% prev) as release below 3% may hurt pound.
Bearish scenario on firm break below 10SMA would expose pivotal Fibo support at 1.2638 (61.8% of 1.2559/1.2762) and risk retest of key support at 1.2559 (31 May low).
Conversely, rally above 20SMA would require confirmation on break above recovery high at 1.2762 to expose pivotal Fibo barrier at 1.2796 (38.2% of 1.31791.2559) violation of which would signal stronger correction.
Res: 1.2692, 1.2745, 1.2762, 1.2796
Sup: 1.2668, 1.2636, 1.2605, 1.2580
