The British Pound dropped yesterday despite diminishing fears of a hard Brexit. The latest EU-UK Brexit talks were constructive and EU showed readiness to avoid a no-deal Brexit. Additionally, Sir Oliver Letwin, a senior Tory member, also reduced the odds of a no-deal Brexit. Despite these recent positive news, market participants are still skeptical as long as Boris Johnson remains the front-runner in the PM race. Traders may now keep an eye on monthly jobs report and BOE Governor Carney’s speech at the G7 for fresh clues. Also, the US Retail Sales and the Fed Chair’s comments will also be closely examined for near-term market direction.
The Cable bulls couldn’t hold above the recently broken 50-day moving average, as the bears rejected the price at 1.2570 and pushed below it. Currently, the sellers are testing the 1.2506 support, a break below it would open doors for further weakness towards 1.2440. However, if the bulls manage to hold 1.2506 and were able to break above the 50-day moving average once again, then a 1.2570 retest would be a plausible scenario.
Support: 1.2506 / 1.2440
Resistance: 1.2570 / 1.26