Cable surged in early US trading on Monday and hit new five-week high at 1.3051 after EU Brexit negotiator Barnier said that it is realistic to expect deal with Britain in 6-8. Hawkish steer in Brexit negotiations inflated pound strongly, in addition to upbeat UK GDP data which rose 0.6% 3m/3m in July, in the fastest pace in almost one year. UK trade gap narrowed in July to 9.97 billion pounds from 10.68 billion gap in June and also beating forecast at -11.75 billion pounds. Strong trade balance/GDP data offset negative impact from weaker than expected UK Manufacturing production which fell by 0.2% compared to forecasted 0.2% rise and 0.4% increase last month. Fresh optimism over Brexit talks improved sentiment and unleashed pound’s bulls, which faced strong headwinds and were repeatedly rejected in attempts towards falling 55SMA (1.3017) in recent sessions. Improving daily techs on today’s rally, which broke through falling 55SMA pivot and also probed above recent peak at 1.3043, underpin fresh action, but confirmation of bullish continuation, needs to eventually fill last week’s gap and close above 55SMA. Sustained break higher would open way for extension towards falling thin daily cloud (cloud base lays at 1.3104). Broken Fibo 38.2% barrier at 1.2971 now acts as solid support and should keep the downside protected.
Res: 1.3043; 1.3051; 1.3104; 1.3162
Sup: 1.3000; 1.2971; 1.2935; 1.2896
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