Sterling maintains firm tone in early Thursday’s trading and pressures previous day’s high at 1.2670, posted after 1.1% daily rally on Wednesday. UK PM Theresa May survived the confidence vote of her own party and will continue to lead the country on its way for the exit from the European Union. Current positive sentiment could further boost pound, however, strong concerns over disorderly Brexit, which could be very likely scenario of the end of divorce process, keep overall picture negative. PM May’s Brexit plan faces strong opposition, as Wednesday’s vote showed that more than a third of Conservative party lawmakers are against it, indicating that parliamentary approval of Brexit deal is not closer than before the confidence vote to PM May. Wednesday’s bullish outside day is positive signal, but key barriers at 1.2675/83 (falling 10SMA / Fibo 61.8% of 1.2810/1.2476) need to be cleared to signal further recovery and expose next strong barriers at 1.2744 (falling 20SMA / Fibo 61.8% of 1.3174/1.2476). Overall picture is negative and suggest that current recovery could be seen as positioning for fresh weakness. Only sustained break above pivotal barriers at 1.2907/35 zone (Fibo 61.8% of 1.3174/1.2476 / 22 Nov high / falling 100SMA) would neutralize bears.
Res: 1.2670, 1.2683, 1.2744, 1.2810
Sup: 1.2603, 1.2591, 1.2555, 1.2476
