Cable broke through 1.24 handle and 2019 low at 1.2397 in early European trading on Wednesday and hit new 27-month low in extension of strong fall on Tuesday, when the pair was down almost 0.9%, in the biggest one-day fall since 28 Mar.
Persisting fears about no-deal Brexit remain main driver of the British pound, as the European Union under new leadership will not allow any changes to existing divorce deal terms that maintains strong pressure on sterling, with stronger dollar across the board, adding to negative outlook.
Today’s fresh bearish extension completed 2019 1.2397/1.3381 cycle and opened way for further weakness and possible retest of lows in 1.20 zone, hit on strong post-Brexit vote fall in 2016.
Daily MA’S remain in strong bearish configuration and negative momentum continues to rise, supporting scenario, but bears may take a breather as stochastic is entering oversold territory and RSI turned sideways on the border of oversold zone.
Markets are awaiting release of UK inflation data today for possible fresh signals, although forecasts for June CPI show unchanged values from the previous month (m/m 0.3% f/c vs 0.3% prev / y/y 2.0% f/c vs 2.0% prev).
Upticks are expected to provide better selling opportunities on overall bearish picture, with former low at 1.2505 (also falling 10DMA / base of thick 4-hr cloud) expected to cap.
Res: 1.2420, 1.2484, 1.2505, 1.2520
Sup: 1.2382, 1.2354, 1.2332, 1.2300
