Cable probed briefly above 1.2500 level and hit session high at 1.2512, in immediate reaction to upbeat UK PMI data, but subsequent quick easing signaled that recovery faces strong headwinds.
Data showed significant improve in manufacturing (June PMI 50.1 vs 45.0 f/c) and services (June 47.0 vs 40.0 f/c) sectors, following opening of the economy after lockdown, but were so far insufficient to provide stronger boost to the pair for break of strong barriers that lay ahead.
Monday’s bullish engulfing generated positive signal but weak momentum prevented pound to benefit from solid data, as recovery shows initial signs of stall on approach to key barriers at 1.2517/30 (Fibo 38.2% of 1.2813/1.2335 / converged 10/20DMA’s in attempt to create bear cross).
Failure to break these barriers would keep the downside vulnerable, while break and close above would generate bullish signal for extension of recovery.
Broken converged 30/55DMA’s (1.2423) offer solid support which guards pivots at 1.2335 (Monday’s low) and 1.2315 (daily cloud top).
Resistances above 1.2530 lay at 1.2574 (50% retracement of 1.2813/1.2335) and 1.2630 (Fibo 61.8%).
Res: 1.2496, 1.2512, 1.2574, 1.2600
Sup: 1.2436, 1.2423, 1.2400, 1.2356
