Cable pressures 1.30 barrier but so far lacks strength for final break
Cable steadies above thick daily cloud and just ticks below psychological 1.30 barrier in early European session on Friday.
Sterling quickly recovered from over 100-pips dip on Thursday after the BOE announced preparation for possible introduction of sub-zero rates, boosted by comments from EU Commission President Ursula Von der Leyen, who said she was convinced a trade deal between the EU and UK was still possible.
Today’s release of UK retail sales data which ticked above forecast, added to optimistic tone.
Repeated close above the top of rising daily cloud was bullish signal, but Thursday’s Doji candle (although with long tail which signals that the downside is for now protected) points to indecision, as today’s action was so far shaped in tight Doji.
However, near-term picture is still unclear as conflicting daily indicators are lacking clearer signal.
Fourteen-day momentum holds deeply in negative territory and continues to head south and stochastic is entering overbought zone, while thick daily cloud rises and underpins the action.
Weekly chart more supportive factors as bullish momentum is rising, the pair is on track for bullish weekly close after strong fall previous week and the action rose above 200WMA (1.2932) close above which would add to positive signals.
Fundamentals are expected to remain pound’s key driver, as concerns about negative rates faded quickly and traders turn focus towards trade talks with growing optimism that two sides would eventually reach a deal.
Res: 1.3000; 1.3037; 1.3053; 1.3102
Sup: 1.2958; 1.2932; 1.2893; 1.2864