Bears take a breather as market looks for signals about the action of new UK PM
Cable edged higher in Asian / European trading on Tuesday, boosted by cautious optimism that new UK Prime Minister Liz Truss will manage handle deepening crisis, though market will look for a much more evidence about the action the new government will take.
The key problem that Truss face will be to cap energy costs, as soaring prices strongly hit UK households, by sharply rising cost of living.
The new government is expected to unveil the plan for providing a billions of pounds to help struggling Britain’s households and will also need to answer the questions about fiscal and monetary policy.
This comes a week ahead of Bank of England policy meeting (Sep 15), in which the central bank is expected to hike interest rates for the seventh consecutive time, with around 70% expecting 75 basis points hike to 2.5%, in its fight to bring the double-digit inflation under control.
Technical picture shows fatigue of larger bears as daily studies are oversold, though firm bearish structure and persisting negative fundamentals suggest that corrective action likely will be just positioning for fresh push lower.
Upticks should be ideally capped under daily Tenkan-sen (1.1672), also 50% retracement of 1.1900/1.1443 bear-leg, to keep bears intact for final attack at 2020 low at 1.1410, loss of which would spark stronger acceleration lower.
Res: 1.1618; 1.1672; 1.1703; 1.1761
Sup: 1.1568; 1.1512; 1.1443; 1.1410