Cable jumped in early European trading on Thursday, dragged by higher Euro on renewed hopes of US/China trade deal, after holding within tight range in Asia.
Wednesday’s strong upside rejection and close in red pointed to strong fears of no-deal Brexit scenario, but key 1.22 support zone still holds and Wednesday’s inverted hammer might signal rebound.
Oversold stochastic supports the notion, however, overall negative studies and sentiment suggest that bounce would be just positioning for fresh push lower. A batch of UK data is due today and expected to provide fresh signals, with focus on GDP release (m/m 0.0% f/c vs 0.3% prev/y/y 0.9% f/c vs 1.3% prev).
Weaker than expected figure could push pound below 1.22 pivot and signal extension of downtrend from 1.2582.
Conversely, better than expected data could spark further recovery towards falling 10DMA (1.2278) and daily Tenkan-sen (1.2303).
Only break and close above pivots at 1.2343/46 (Fibo 38.2% of 1.2582/1.2195/daily cloud top) would sideline downside risk.
Res: 1.2245, 1.2256, 1.2278, 1.2303
Sup: 1.2225, 1.2202, 1.2195, 1.2155