Cable is consolidating above 200SMA in early Wednesday’s trading, following 0.7% fall on Tuesday after UK lawmakers voted down an amendment to extend the deadline for Britain to leave EU.
Pullback from last Friday’s multi-week high at 1.3217 found ground at broken 200SMA (1.3057) despite soured sentiment on UK parliament’s negative vote that increases risk of the divorce without deal.
Bullish setup of daily MA’s (which formed multiple bull-crosses and converging 10/200SMA’s on track to form golden-cross) and strong bullish momentum, continue to underpin near-term action.
Ability to hold above 200SMA would maintain bullish bias for retest of 1.3217 peak and possible extension of larger uptrend December’s low at 1.2476.
Negative scenario on sustained break below 200SMA would open way for further easing and expose supports at 1.3000 (psychological) and 1.2904 (100SMA).
Fed’s decision on conclusion of two-day policy meeting, is expected to be the key market driver today.
With the central bank widely expected to stay on hold, focus will be on the rhetoric of chief Powell.
The Fed would come with more dovish tone regarding further tightening this year, due to strong signals of global growth slowdown that could boost the risk appetite as Fed interest rates remain unchanged and continue to support dollar.
Post-Fed rally of the greenback, which was in defense and positioned for rebound, could be seen as likely scenario that would have negative impact on sterling.
Res: 1.3118, 1.3199, 1.3217, 1.3257
Sup: 1.3057, 1.3036, 1.3000, 1.2904
