Cable came under increased pressure after UK Services PMI came in much weaker than expected figure in March (51.7 vs 53.9 f/c and 54.5 in Feb) and dipped to 1.40 support on subsequent bearish acceleration.
The sentiment soured after repeated failure to clear 10SMA and rejection at pivotal 1.4099 barrier ) Fibo 38.2% of 1.4243/1.4010 bear-leg), with downbeat data hurting pound further.
Bears faced strong headwinds at psychological 1.40 support (also daily cloud top), helped by weaker than expected US data (weekly jobless claims rose to 242K vs 225K f/c and downward-revised previous week’s figure to 218K, while US trade gap widened to $57.6B in Feb vs 56.9B f/c and 56.7 B gap in Jan) which pressured dollar and gave a breather to pound’s bears. Negative tone however remains in play, keeping the downside vulnerable, with break through 1.40 handle and 30SMA (1.3975) expected to generate strong bearish signal on completion of failure swing pattern on daily chart.
Meanwhile, the pair may hold in extended consolidation ahead of Friday’s release of US jobs data which could generate fresh direction signal.
South-turned 10SMA (currently at 1.4083) remains key near-term barrier and negative outlook will remain while the price remains capped here.
Res: 1.4032; 1.4069; 1.4083; 1.4099
Sup: 1.4000; 1.3975; 1.3915; 1.3889
