Cable stands at the back foot after surprise BoE’s dovish turn but key supports still hold
Cable is holding within narrow consolidation in early Friday’s trading after Thursday’s fall broke and closed below important Fibo support at 1.2819 and cracked 1.2800 handle, generating negative signal.
Sterling was hit by unexpected dovish turn from BoE on MPC’s 7-2 vote that changed the view about possible rate cut.
Bears so far lack momentum for extension lower, despite marginal close below 1.2819 Fibo support and expected to consolidate before fresh weakness, as daily stochastic is oversold.
Daily Tenkan-sen (1.2885) is expected to cap extended upticks and keep bears in play.
Negative outlook is supported by weekly stochastics’ bearish divergence as indicator is about to reverse from overbought zone.
Clear break below 1.2788 (24 Oct low) is needed to trigger stops parked below and generate reversal signal on completion of daily failure swing pattern.
This would open way towards pivotal 1.2700 zone (200DMA / Fibo 38.2% of 1.2195/1.3012) and risk further weakness on break.
Only break and close above daily Tenkan-sen would neutralize downside threats.
With no economic indicators’ releases from UK scheduled today, focus will turn to performance of US dollar and possible Brexit news.
Res: 1.2830; 1.2862; 1.2885; 1.2917
Sup: 1.2804; 1.2788; 1.2749; 1.2700