The Sterling retested the recent highs 1.2740s but the bulls lost momentum and price fell back below 1.27. Having witnessed the unexpected rise of the Brexit party during the EU election results, in yesterday’s by-election of Peterborough, Labour beats Nigel Farage & Co. (Brexit Party), to hold seat. Additionally, anonymous EU sources reported that the regional leaders are ready to allow another Brexit extension considering the need for the second referendum after the new PM takes office. This confirmed further Brexit drama and uncertainty are ahead of market participants. In terms of macroeconomics, traders will be positioning themselves according to today’s NFP results, a better than expected data will cause a rush on the US Dollar, and will likely send the Cable towards 1.2650 or below. However, if the results miss expectations, then 1.2750 will likely be taken out by the bulls.
The Cable bulls attempted to push price towards 1.2750 but the sellers showed up and pushed the Sterling lower below 1.27. Today, the Pound bulls are back once again, trying to find momentum to break above 1.2750, if they succeed then their next target would be 1.28. However, if the bulls lose momentum and break below the 50-day moving average, that could signal the end of this counter-trend move, and we will expect further sell-off on this pair.
Support: 1.2650 / 1.26 / 1.2560
Resistance: 1.27 / 1.2750 / 1.28