Cable extends lower in early hours of European session on Thursday after consolidating losses of past two days in Asia.
Fresh weakness cracked strong support at 1.4040 (bull-channel support line/Fibo 38.2% of 1.3711/1.4244 rally) and eyes next pivot at 1.4000 (top of thick daily cloud/psychological support). Pullback from double-top at 1.4244 weakened near-term structure, increasing risk of deeper correction.
Batch of UK data are due today and closely watched for fresh direction signal. Focus is on UK Q4 GDP and current account. Gross domestic product is forecasted to remain unchanged in Q4 at 0.4% (q/q) and annualized figure at 1.4%.
Current account deficit is expected to widen (-24B f/c vs -22.8B in Q3) and with than expected figures expected to put sterling under increased pressure for acceleration through 1.4040/00 pivots which could extend towards 1.3915 (Fibo 61.8% of 1.3711/1.4244).
Conversely, cable could bounce and signal an end of corrective phase if UK data beat forecasts.
Broken 10SMA caps today’s action for now and marks initial resistance at 1.4085, with break above needed to ease immediate bearish pressure.
Res: 1.4085, 1.4118, 1.4163, 1.4200
Sup: 1.4040, 1.4000, 1.3970, 1.3915
