The Pound broke below 1.20 yesterday but quickly found excessive demand pushing it above 1.21 after the support of the UK parliament to avoid a no-deal Brexit. Earlier during the Asian session, British lawmakers voted in favor of the motion that will push the UK PM Boris Johnson to seek the Brexit deadline extension from October 31 to January-end while also leaving the window open for further extension unless getting a deal with the bloc. However, final voting on the motion is left to be performed during the day, which in turn will enable Brexit-haters to take control of the negotiations off the government. Further, the PM Johnson has announced that he would call for a motion to support an early election in mid-October if the parliament takes over the Brexit power. In terms of macroeconomic data, the UK will release the Composite and Services PMI numbers, keeping in mind that the recent UK economic data has been abysmal and recessionary. If that trend continues, it could halt this recent bullish momentum.
The Sterling briefly broke below the psychological figure 1.20 yesterday, but the bulls immediately pushed the price back up. The bullish momentum is still intact, and the buyers are trying to retest the 1.2175 – 1.22 area, where we also find the 50 and 200-day moving averages, along with the bearish trend line. As long as price remains below that area, then the overall bias will remain with the bears.
Support: 1.2080 / 1.1985
Resistance: 1.2175 / 1.2250