Cable maintains negative tone at the beginning of the week and cracked psychological 1.40 support, in extension of steep four-day fall from last week’s peak at 1.4376. Weak releases of key UK data last week and dovish comments from BoE’s Governor Carney, sidelined strong hopes for rate hike in May and soured sentiment. Pound spiraled lower in reaction on news, which resulted in the biggest weekly loss since early Feb. Fresh weakness dented larger bulls as repeated rejection of post-Brexit fall’s recovery is forming double-top on weekly chart. Also, last week’s break below bull-channel support line and violation of psychological 1.40 support (reinforced by 55SMA) are strong bearish signals. Pivotal support at 1.3965 (05 Apr trough/Fibo 61.8% of 1.3711/1.4376 rally) came under pressure and firm break here would confirm reversal and open way for further weakness. Bears may show hesitation on approach to 1.3965 support as slow stochastic is in deep oversold territory on daily chart, with corrective upticks expected to remain below 1.41 zone (30SMA/broken bull-channel support line) to keep bears intact. Negative momentum is building on daily chart and signals further downside, along with bearishly-aligned MA’s.
Res: 1.4008, 1.4030, 1.4094, 1.4103
Sup: 1.3989, 1.3965, 1.3931, 1.3901
