Despite strong US Dollar and political pessimism surrounding the UK, the Pound closed negatively on Friday but remained resilient and did not follow the Euro’s footsteps. The reason could be market’s greenback profit taking on the day of the Labor Day Holiday at the US while anticipating improvement in the UK Markit Manufacturing PMI, from 48 to 48.40, could be considered as an additional catalyst for the bounce. However, political plays are getting worse in the UK as Tory MPs are warned not to go rebel against the UK’s PM Boris Johnson’s agenda of temporary stopping the Parliament from activities. With this, Boris haters got an additional reason to protest against the no-deal Brexit as well as PM Johnson’s ability to discontinue the parliament’s actions. However, comments from the Chancellor of the Duchy of Lancaster, Michael Gove, increased the odds for no-deal Brexit by refusing to rule out any law that can stop no-deal departure. Today, Brexit drama will resume as traders only hope for today will be a better than expected PMI data for a temporary boost to the upside.
The Sterling dropped below the rising trend line and currently price is trying to retest the broke support. Failure to break above 1.22, momentum on price will likely turn to the bears side as the sellers will attempt to take Friday’s lows 1.2140, for a possible retest of 1.21. The bulls on the other hand, will have to break and hold above 1.22 to remain relevant.
Support: 1.2140 / 1.21
Resistance: 1.2175 / 1.22