The Pound trades lower as the greenback strengthens following a shift in investor sentiment. Yesterday, risk appetite for investors fell sharply as global equities dropped. The drop in risk appetite drove investors away from high beta currencies such as the Sterling towards low beta currencies such as the US Dollar. Moreover, the US Dollar was also supported by better than expected US Housing figures with both Building Permits and Housing Starts printing better than expected. For today, the pair will be mainly driven by US Dollar fundamentals with several US economic data set to be released. However, investors need to also keep an eye on any major announcement related to Brexit even though no one expects anything significant to arise before the EU summit on Sunday.
The Pound drops below the 1.2807 support but finds strong support at 1.2776. The general momentum remains bearish as prices trade below all the three major moving averages. A reversal to the upside will only be confirmed if prices break above the 1.2892 level which also coincides with the 50-period moving average. Whereas, the continuation of the drop will only be confirmed if prices broke below the 1.2776 support.
Support: 1.2776/ 1.2729
Resistance: 1.2892 / 1.2937