Pound stays in red in early Wednesday’s trading and hits new lowest levels since early Jan, following Tuesday’s short-lived recovery attempts above 1.2800 mark.
The sentiment remains negative after PM May’s enhanced plan failed to attract opposition and several leading Conservative Eurosceptics.
Basically, May did not offer significant changes of the plan that suggests the parliament would again vote it down in June.
Bearish studies on daily and weekly chart favor further weakness, with adjustments on oversold conditions seen as positioning.
Bears focus immediate target at 1.2629 (Fibo 76.4% of 1.2397/1.3381) with risk of extension towards 1.2476 (2018 low, posted on 12 Dec).
Release of UK inflation data is key event for pound today (Apr y/y 2.2% f/c vs 1.9% prev / m/m 0.7% f/c vs 0.2% prev), but markets do not see potential for stronger reaction, even on upbeat release as political turmoil in the UK over Brexit continues to sour the sentiment and maintain pressure on pound.
Falling 10 SMA (currently at 1.2831) marks pivotal barrier and only sustained break here would sideline bears.
Res: 1.2719, 1.2773, 1.2810, 1.2831
Sup: 1.2661, 1.2629, 1.2615, 1.2580
