Cable dips further on Thursday, following Wednesday’s upside rejection and bull-trap above Fibo 76.4% barrier at 1.3291.
Daily close in red was initial negative signal, with fresh extension lower in early Thursday’s trading, driven by soured sentiment on resignation of PM Boris Johnson’s director of communications Lee Cain.
Signs that EU/UK trade talks might extend past mid-November deadline and weaker than expected growth of the UK economy in Q3, weigh further on pound.
Pullback from new nine-week high at 1.3311 extends below 1.3200 handle and eyes pivotal Fibo support at 1.3136 (38.2% of 1.2855/1.3311 upleg), with break here to risk extension towards strong supports at 1.3080 zone (daily cloud top/50% retracement of 1.2855/1.3311/converged daily Tenkan-sen/Kijun-sen).
Bearish divergence of 14-d momentum on daily chart and stochastic emerging from overbought territory, support fresh bears for deeper pullback, but news about the progress of trade talks are expected to remain pound’s main driver.
Res: 1.3203, 1.3228, 1.3278, 1.3311
Sup: 1.3160, 1.3136, 1.3118, 1.3080
