Cable dipped back to 1.4300 zone, where the pair traded at the beginning of American session, after pulling back from new multi-month high at 1.4376 on disappointing UK earnings numbers. Wages in the UK did not rise in expected pace, coming unchanged at 2.8% in Feb vs forecasted 3.0%.
Sterling rallied in twelve consecutive days from 1.3965 trough and left an series of higher highs and higher lows, which could be interrupted, as negative signal is building on daily chart.
Overbought slow stochastic is attempting to reverse and has already formed bearish divergence, which could stronger influence bulls and signal correction.
Today’s close in red, on failure to clearly break above former recovery top at 1.4344 would be initial bearish signal for deeper pullback.
On the other side, dips are expected to be limited as pound remains well supported on expectations of BoE’s rate hike on policy meeting next month.
Pullback would face solid support at 1.4244 (former highs) and should be ideally contained above rising 10SMA (1.4176) to keep intact overall bulls.
Tomorrow’s release of UK inflation data is seen as another key event for sterling which could provide fresh direction signal.
Res: 1.4344; 1.4376; 1.4400; 1.4450
Sup: 1.4300; 1.4277; 1.4244; 1.4176
