The Pound bounced a bit yesterday in the absence of any negative Brexit headline for the day and lack of any dovish comments from BOE’s Carney. However, traders remain cautious ahead of British CPI, Tory leadership contest and most importantly the FOMC. A dovish Fed will likely boost the Pound much higher. However, a ‘patient’ Fed will put downside pressure on the Cable, and will give the bears the green light to resume the sell-off. In political news, during the second round of Conservative voting for the UK’s Prime Minister, Boris Johnson is still leading the race, however, Dominic Raab lost yesterday leaving only 5 runners for the post. There will be another round of voting today (and probably tomorrow) to leave only two members at the end.
The Sterling found bid just above 1.25, pushing price higher towards 1.2570. The bulls need to continue with their momentum and break above at least 1.26 to stop the bears’ dominance. However, if the sellers manage to break below 1.25, then we expect further downside move on the British Pound.
Support: 1.2530 / 1.25 / 1.2480
Resistance: 1.2570 / 1.26 / 1.2625