The British Pound continued to recover yesterday due to the Dollar weakness after the sluggish data that came out from the US. Market participants started to price-in that the Fed will announce a possible rate cut by the end of the year. In terms of politics, Brexit deadlock remains far from solution as PM May has already stepped back from putting any proposals for vote during this week and shifted the burden to the next PM, which in turn could raise possibility of a hard Brexit as both Boris Johnson and Nigel Farage, are pressing for it. In terms of macroeconomics, traders will keep an eye on the Construction PMI as it could influence this recent short-term bullish move.
The Cable bulls pushed price past the 1.2650 resistance level, which was also the 50-day moving average, eyeing 1.27 as their next target. If the bulls successfully break above that level, then their next possible target will be 1.2750. The bears, on the other hand, need to break back below 1.2650 and the 50-day moving average to regain control and push price towards 1.26.
Support: 1.2650 / 1.26
Resistance: 1.27 / 1.2750