Cable is firmly in red on Friday and cracked support at 1.3087 (20 Oct spike low) on extension of Thursday’s strong fall.
Sterling tracked the Euro which was slammed by dovish ECB and has fully reversed 1.3087/1.3278 upleg after recovery action was repeatedly capped under the top of thickening daily cloud. Daily techs returned to bearish mode and favor further weakness with strong supports at 1.3059 (100SMA) and 1.3026 (06 Oct low), coming under increased pressure.
The pair looks for close below 1.3110 (broken Fibo 61.8% of 1.2773/1.3655 rally) for initial bearish signal, with further negative signals seen on sustained break below 1.3059/26. This would open psychological 1.3000 support for test and could trigger further bearish acceleration on close below 1.3000 handle.
Broken 55SMA caps today’s action and marks initial resistance at 1.3159, followed by converged 10/20SMA (1.3181/93) which guard key barrier at 1.3214 (daily cloud base). With no releases from the UK scheduled today, focus turns towards US GDP data.
US Gross Domestic Product is expected to rise 2.5% in Q3 which is seen as slowdown in comparison to Q2 growth by 3.1%, and the dollar may come under pressure on weaker than expected release, which would give a break to pound’s bears.
Res: 1.3110, 1.3159, 1.3181, 1.3214
Sup: 1.3059, 1.3026, 1.3000, 1.2981
