Impressive rally on sidelined idea of negative rates, Brexit optimism
Cable advanced 1.2% on Tuesday, with strong acceleration seen during European session, when the pair hit two-week high at 1.2349.
Comments from BoE’s Chief Economist Haldane that the central bank is not close to introduce sub-zero interest rates and optimism on possible compromise over Brexit negotiations inflated pound strongly.
Fresh rally surged through daily cloud (1.2248/1.2304) and approaching 50% retracement of 1.2642/1.2074 at 1.2358.
Close above cloud will be significant bullish signal which may further squeeze shorts for extension to pivotal points at 1.2425 (Fibo 61.8%) and 1.2467 (8 May high).
Improving daily techs add to positive tone but fundamentals remain pound’s key driver, with near-term sentiment to sour on negative Brexit news, pandemic’s damage to the economy or fresh talks about sub-zero rates.
Daily cloud offers solid support and return below cloud base would revive bears.
Res: 1.2358; 1.2400; 1.2425; 1.2467
Sup: 1.2304; 1.2285; 1.2248; 1.2232