Bears show signs of fatigue above 200SMA but no signals of reversal so far
Cable holds within narrow range in European trading on Friday and attempts to stabilize above psychological 1.30 support.
Thursday’s long-legged Doji suggests that strong three-day fall might be running out of steam and profit-taking may prompt recovery.
With existing hopes of deal in US/China talks, risk aversion showed initial signs of stall that could help pound to recover some of this week’s losses.
On the other side, lack of progress in Tory/Labor Brexit talks weighs and maintains negative sentiment.
Daily techs are mixed, but hopes for recovery remain in play while the price holds above key 200SMA.
The pound showed mild reaction on mixed UK data, as GDP came in line with expectations, Industrial / Manufacturing output showed better than expected numbers, while construction output fell below consensus.
Brexit remains key driver and current pessimism may keep sterling at the back foot.
Focus turns towards US inflation data due later today, for fresh signals.
Near-term action holds above cracked Fibo support at 1.2985 (61.8% of 1.2865/1.3179), which managed to limit several attempts lower and close below would generate bearish signal, confirmation of which would need sustained break below 200SMA(1.2959).
At the upside, converged 30;10; 5 SMA’s (1.3034/38) mark pivotal barrier, close above which would generate initial signal of formation of reversal pattern on daily chart.
Res: 1.3027; 1.3038; 1.3059; 1.3077
Sup: 1.2985; 1.2959; 1.2939; 1.2900