Cable fell around 0.8% on Tuesday on deepening political crisis, following calls from a number of lawmakers to PM Starmer to step down after his Labour Party suffered heavy losses in recent local elections.
Fresh weakness of sterling and shares, as well as rise of UK long-dated borrowing costs to the highest in three decades, came because of a change of investors’ sentiment towards potential scenario of change of leadership.
Although Starmer opposed calls to resign in today’s cabinet meeting and said he would get on governing, sterling is expected to remain under pressure on growing political uncertainty, as well as threats of deepening economic crisis, as the world starts to feel the full impact of the US – Iran war.
Technical studies on daily chart were weaker on Tuesday, but overall structure is still bullish, although dented with today’s drop.
Fresh bears faced headwinds from daily cloud top (1.3514), but the cloud is narrowing and about to twist in two weeks that could attract bears.
Penetration of cloud would generate initial bearish signal, which will look for confirmation on extension below pivotal supports at 1.3467/50 (Fibo 38.2% of 1.3159/1.3657 / late Apr higher base) break of which to signal reversal and open way for deeper drop.
Daily indicators turned south, although still holding in positive territory, with a batch on converged DMAs at 1.3480/20 zone (100 / 55 / 200) still in bullish configuration and marking significant supports.
Res: 1.3555; 1.3614; 1.3658; 1.3700
Sup: 1.3514; 1.3480; 1.3450; 1.3420
