Wednesday’s probe above daily cloud / 55SMA (1.2793) was short-lived and subsequent pullback left Doji candle with long upper shadow, signaling strong hesitation at important 1.2800 resistance zone (reinforced by daily Tenkan-sen at 1.2806).
Fresh easing on Thursday threatens of further downside but bears were so far contained by hourly cloud top / Wednesday’s low at 1.2722.
Markets are awaiting BoE’s policy decision today for fresh signals. The central bank is expected to keep rates unchanged, but traders will be closely watching BoE’s stance in regards to rising inflation, mixed numbers from labor sector and political turmoil following last week election.
Hawkish BoE may offer temporary support to the pound, however, overall bearish short-term structure continues to weigh.
Key supports lay at 1.2640 zone (near-term base) and 1.2623 (100SMA), loss of which would further weaken the structure and expose next significant support at 1.2565 (200SMA).
At the upside, renewed attempts above 1.2800 resistance zone will face resistance at 1.2841 (daily Kijun-sen) and are expected to stay capped by falling 20SMA (1.2870).
Res: 1.2760, 1.2793, 1.2817, 1.2841
Sup: 1.2722, 1.2704, 1.2673, 1.2635
