The Pound pulled back yesterday after Prime Minister Boris Johnson’s Luxembourg visit failed to provide any key updates. The EU President criticized the Tory leaders’ depth of details while British Foreign Secretary Dominic Raab reiterated the PM”s pledge to leave on October 31 and passing the bucket of criticism back to the EU. Furthermore, Mr. Johnson canceled the press conference with the Luxembourg PM, which got him additional criticism. On the other hand, the US Dollar remains strong as the recent rise in safe-haven demand, mainly due to the attacks of Saudi Arabia, and adding in the mix the optimism surrounding US-China trade talks. Today, with the lack of any macroeconomic data coming out from the UK, the Cable could continue pulling back if the sentiment around Brexit remains bearish.
The Cable bears halted this recent rally at 1.25 and they seem back in control, at least in the short term, as they are looking to retest the important 1.2385 and 1.2325 area of support. The bulls have to get back in around those levels to push the prices back up and protect the uptrend that connects the lows starting September 5. Failure to do so, then we should expect deeper pullback on the Sterling.
Support: 1.2385 / 1.2325
Resistance: 1.25 / 1.2550