Cable regained traction and accelerated higher in early Monday trading, on revived risk sentiment after US policymakers cooled down expectations for Fed’s jumbo 1% rate hike in late July policy meeting that was speculated last week after the last report showed that US inflation continued to rise.
Recovery is unlikely to pick up as overall picture is negative, with fragile political situation and darkened economic conditions and outlook, leaving a little space for optimism.
Broken psychological 1.20 support reverted to solid barrier which should ideally cap, with extended upticks to stall under 1.2080 (broken Fibo 76.4% of 1.1409/1.4349 / daily Kijun-sen) and keep larger bearish structure intact.
Last week’s close below 1.20 level (for the first time since mid-March 2020) generated strong bearish signal and added to negative technical studies, which point to increased risk of fresh bearish acceleration towards 2020 pandemic lows.
Only sustained break above 1.2080 pivot would sideline larger bears and allow for stronger correction.
Trades focus on UK labor data on Tuesday and June inflation report on Wednesday, for fresh signals.
Res: 1.2000; 1.2055; 1.2083; 1.2125.
Sup: 1.1861; 1.1804; 1.1760; 1.1700.
