Technical Outlook: Pound Struggles To Regain 1.40 Pivot Despite Support From Hawkish Comments And Weaker Dollar

Cable holds firm tone on Friday and attempts again towards psychological 1.40 barrier, following Thursday’s spike to 1.4066 after BoE rate decision and subsequent quick pullback. Sterling was boosted by hawkish hold from BoE, as the central bank kept interest rate unchanged but signaled hikes in the near future. Additional support was provided by hawkish comments from BoE deputy governor Broadbend on Friday, who said that couple of hikes in 2018 shouldn’t be a great shock. Also, weaker US dollar on the second shutdown of the US government sine the beginning of the year, underpinned pound on Friday. Fresh attempts higher on Friday look for renewed probe above 1.40 trigger (Fibo 38.2% of 1.4277/1.3835 pullback/rising 20SMA), with close above here needed to generate bullish signal for extension of recovery rally from 1.3840, where higher base is forming. Technical studies send mixed signals as daily slow stochastic is attempting to emerge from oversold territory but momentum is in the negative territory. Prolonged consolidation with immediate risk shifted lower could be expected while the price stays below 1.40 pivot. Next important support lies at 1.3900 (daily Kijun-sen / near session low) and break here would generate bearish signal for retest of 1.3840 base and extension towards Fibo support at 1.3800 (61.8% of 1.3457/1.4344 rally).

Res: 1.4000, 1.4043, 1.4066, 1.4109
Sup: 1.3940, 1.3900, 1.3856, 1.3835