Cable surges to eight-month high after US labor data

Cable accelerated to a multi-month high after US labor data added to Fed Powell’s dovish stance and strengthened expectations for the start of rate cuts, most likely in June.

Divergence between Fed and BOE’s rate outlook, as the Bank of England’s narrative is more hawkish with expectations to keep rates unchanged for some time on elevated core inflation.

Fresh gains broke through pivotal barriers at 1.2827/50 (former top of Dec 28 / 200WMA) and expected to generate fresh bullish signal on close above these levels.

The pair is also on track for the biggest weekly advance since mid-November and close above the top of thick weekly Ichimoku cloud, which capped the action for the four straight weeks, which is expected to boost bullish signals.

Immediate target lays at 1.2900 (round-figure), followed by 1.2945 (Fibo 138.2% projection of the bull-leg from 1.2518) and psychological 1.30 barrier.

Expect some price adjustments as daily studies are overbought, with limited dips to be ideally contained at 1.2770/50 and offer better levels to re-enter bullish market.

Res: 1.2900; 1.2945; 1.3000; 1.3063
Sup: 1.2827; 1.2780; 1.2750; 1.2712