Cable is consolidating above Monday’s low at 1.3189 in early Tuesday’s trading following strong fall after two key Eurosceptic ministers from PM May’s cabinet quit on Monday.
Renewed concerns about hard Brexit put sterling under increased pressure and turned bias into negative mode after Monday’s pullback generated initial signal of stall recovery leg from 1.3049. Monday’s close below daily Kijun-sen (1.3260) which so far caps today’s action, was negative signal, but confirmation of reversal requires break and close below daily 10SMA/Monday’s low (1.3189).
Mixed techs (flat 10; 20; 30 MA’s/bullish momentum and negative slow stochastic) suggest the pair may hold in extended consolidation before taking direction. A batch of UK data, due today, could spark fresh action as forecasts for Industrial and Manufacturing production, as well as monthly GDP estimation are above previous figures and could provide support on upbeat releases.
Otherwise, the downside risk could increase on weaker than expected results.
Bearish signal could be expected on firm break below 1.3189 which could spark further weakness and confirm reversal on sustained break below 1.3169 (Fibo 61.8% of 1.3049/1.3362 upleg). Lift above 1.33 handle would be bullish signal, which requires confirmation on regain of Monday’s high (1.3362) and renewed attempt at falling 55SMA (1.3390).
Res: 1.3272; 1.3310; 1.3362; 1.3390
Sup: 1.3223; 1.3189; 1.3169; 1.3114
