Cable remains constructive ahead UK CPI data, BOE policy meeting

Near-term recovery from 1.3300 zone higher base has received fresh boost from improving geopolitical picture that sparked risk appetite and deflated dollar.

Although today’s action was limited, Cable remains at the front foot as traders await release of May inflation data on Wednesday (3.0% f/c vs Apr 2.8%), with CPI at/above forecast to add to expectations of BoE rate hike in the near future (the central bank MPC meets on Thursday and is widely expected to keep rates unchanged at 3.75%.

Overall near-term structure is expected to remain biased higher while the price holds above important supports at 1.3415 (200DMA) and 1.3408 (daily cloud base) and keep focus at 1.3477 (50% retracement of 1.3653/1.3301 descend)) and more significant 1.3486 barrier (cloud top), violation of which to add to upside prospects and validate base at 1.3300 zone.

Daily studies are still mixed, but 14-d momentum is about to emerge from negative territory and RSI rises above 50 zone, contributing to positive scenario.

Res: 1.3477; 1.3486; 1.3508; 1.3521
Sup: 1.3415; 1.3408; 1.3362; 1.3341