Recovery rally stays capped under daily cloud top where today’s extension of Tuesday’s strong bounce stalled. Profit-taking on two-day rally and disappointing data from UK pushed pound to the session low at 1.2724 and sidelined immediate risk of breaking above pivotal 1.2800 resistance zone.
Average earnings fell to 2.1% in April, missing the forecast at 2.4% and falling below downward-adjusted 2.3% numbers of March.
Stubbornly low wages underscore growing Brexit squeeze and are seen as a warning signal that may keep the pound under pressure, as unemployment rate stayed unchanged at 4.6%, the lowest since 1975.
Better than expected UK jobless claims that rose by 7.3K in May vs forecasted 20.3K, did not help much.
Weakness in the labour sector is also expected to affect BOE and keep central bank’s policy on hold for some time.
Bank of England is expected to keep interest rate unchanged at 0.25% on Thursday’s MPC meeting.
Daily technicals remain mixed, however, today’s rejection at daily cloud top and subsequent easing would keep the downside vulnerable. Extension below 1.2700 handle (Fibo 61.8% of Tue/Wed recovery) would further weaken near-term structure and expose key supports at 1.2640/35 zone.
Res: 1.2796, 1.2806, 1.2847, 1.2882
Sup: 1.2724, 1.2695, 1.2673, 1.2635
