The British Pound dropped hard yesterday after disappointing CBI data and resurfacing hard-Brexit fears. UK PM Candidate Boris Johnson’s pledge to crash out of the EU on October 31 by threatening to follow World Trade Organization’s rules for Brexit if EU refrains from cooperating. His competitor Jeremy Hunt, echoed his words by saying that he’ll only support no-deal Brexit if there is no better option to discuss with the EU. In addition to all of this, less dovish comments from the US Federal Reserve policymakers also triggered the Cable’s recent pullback. Looking forward, quarterly Inflation Report and a press conference by the Governor Mark Carney will be closely observed for fresh clues.
The Sterling bulls couldn’t break above 1.2760 after the 7th attempt since May. The bears showed up and took over the momentum by dropping price back below the 200-day moving average, until the Cable found support just above 1.2660. The bulls will try to protect this level and push price higher to retest 1.2715 and 1.2760. On the other hand, the bears will attempt to break below 1.2660 and the 50-day moving average to take price back around 1.26.
Support: 1.2660 / 1.26
Resistance: 1.2715 / 1.2760