Cable jumped to two-week high (1.3174 after release of much better than expected UK PMI data, but gains were short-lived as traders took profits from longs in past four days and sent the pair to session low at 1.3085.
The sentiment soured after third straight failure to clear pivotal Fibo barrier at 1.3158 (61.8% of 1.3284/1.2954) and Thursday’s close in red that generated initial signal of stall.
Upbeat UK PMI figures further eased expectations for rate cut on BoE’s next week policy meeting, however, pound’s immediate reaction was not in line with expected scenario.
Daily momentum (14-d) is back to negative territory and stochastic is overbought, adding to negative outlook.
Fresh weakness cracked pivotal supports at 1.3093/87 (Fibo 38.2% of 1.2962/1.3174 upleg / converged 20/30DMA’s), close below which would generate negative signal and risk further easing.
Also, Friday’s repeated close below 200WMA (1.3061) would add to bearish outlook.
Alternatively, bounce and close above key Fibo barrier at 1.3158 would sideline downside risk and shift near-term focus higher.
Res: 1.3152; 1.3174; 1.3200; 1.3223
Sup: 1.3085; 1.3061; 1.3043; 1.3025