Cable dipped to the session low at 1.2982 after US jobs data beat, which inflated dollar, but pound’s weakness was so far limited.
US No-Farm payrolls jumped to 250K in Oct, well above Sep downward-revised at 118K and forecast for 193K, marking the third highest result in 2018.
US unemployment remained unchanged at multi-decade low at 3.7% and average hourly earnings came in line with expectations at 0.2%, making US jobs report positive overall. Solid numbers in October signal further tightening in the US labor market which would support Fed’s intention to increase interest rate one more time this year in December. Pound received support earlier today from upbeat UK construction PMI data (Oct 53.2 vs 52.0 f/c) and remains support by positive Brexit news, which so far prevented stronger losses on upbeat US jobs data.
On the other side, dollar’s support from solid NFP could be partially offset by the latest news which dismissed media reports that President Trump was preparing for possible trade deal with China.
Cable’s near-term sentiment remains firmly bullish on Brexit deal optimism, but bulls may take a breather after repeated failure at strong technical barrier at 1.3043 (Fibo 61.8% of 1.3257/1.2695/10SMA). Momentum studies on daily chart turned sideways and support the notion, with broken daily cloud base (1.2980) holding dips and maintaining firm bullish stance.
Today’s close will be watched for fresh signals, as repeated close above cloud base would keep bulls intact for fresh attempts higher after consolidation.
Conversely, bulls might be paused for deeper pullback if weekly close occurs below daily cloud base.
Double-Fibonacci support at 1.2909 (broken Fibo 38.2% of 1.3257/1.2695/Fibo 38.2% of 1.2695/1.3040 upleg) marks pivotal point, where deeper pullback should find ground and keep fresh bulls in play.
Res: 1.3043; 1.3095; 1.3125; 1.3192
Sup: 1.2980; 1.2959; 1.2921; 1.2909
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