Cable remains biased lower following double upside rejection under falling 20DMA (1.2508) and fresh probe below triangle support line (1.2448), with bearish daily studies supporting scenario.
Initial enthusiasm after Boris Johnson became new Britain’s Prime Minister is fading and negative sentiment is returning to play.
The facts that the EU sticks to existing Brexit plan and that Boris Johnson won’t get new divorce agreement without solution for Irish problem, lead to two possible scenarios.
The first one is new Brexit referendum (not favored) and the second will be UK general election, which would be the only way to break Brexit deadlock, as the parliament is likely to block attempts for exit from the EU without a deal.
The pair is on track for bearish weekly close that adds to negative outlook.
Daily close below triangle support would generate negative signal and expose two-year low at 1.2381, violation of which would spark further weakness.
Alternative scenario requires close above 20DMA to sideline immediate downside risk and allow for further recovery towards pivotal barriers at 1.2560/79 (30DMA / 12 July high).
US GDP data today are in focus for fresh signals.
Res: 1.2469, 1.2487, 1.2508, 1.2560
Sup: 1.2417, 1.2400, 1.2381, 1.2365
