Cable fell sharply on Monday, hit by disappointing UK data. UK Manufacturing Production dropped 1.4% in April vs forecasted increase of 0.3%, which marks the biggest drop since Oct 2012. Industrial production was down 0.8% in April, undershooting the forecast for 0.2% rise.
Trade gap widened to 14.04 billion pounds in April from forecasted 11.35 billion gap and previous month’s downward-revised gap at 12 million pounds. Strong miss in all UK data releases today are hit for hawks advocating UK rate hike in August.
Fresh weakness increases downside risk and on track to confirm reversal.
Near-term structure weakened after falling 55SMA capped the upside for the third straight day and subsequent fall adding on rising negative tone.
Pivotal support at 1.3349 (10SMA) came under pressure after fresh bearish acceleration cracked initial pivot at 1.3369 (Fibo 38.2% of 1.3204/1.3472 upleg).
Break and close below 10SMA is needed to confirm reversal and lower top at 1.3472 (07 June high).
Momentum turned lower after failing to break into positive territory, while slow stochastic heads south after reversal from overbought territory, showing a plenty of space at the downside. Only break and close above descending 55SMA would sideline bearish threats.
Res: 1.3400, 1.3441, 1.3472, 1.3520
Sup: 1.3349, 1.3338, 1.3306, 1.3267