Limited recovery is likely to precede fresh weakness
Cable extends bounce from 1.2440 zone double-bottom, inflated by weaker dollar on dovish comments from Fed Chairman Powell.
Signals that the US central bank may opt for more aggressive rate cut in policy meeting at the end of the month, could spark further recovery of British pound, which hit its lowest levels in seven months in past two days.
Overall picture remains bearish as pound is under strong pressure from rising fears of no-deal Brexit and current bounce is so far seen as positioning for fresh downside, as bears eye 2019 spike low at 1.2397 (3 Jan).
Initial barriers lay at 1.2561/70 (10DMA / Fibo 38.2% of 1.2783/1.2439 bear-leg) and break here would signal stronger correction and expose barriers at 1.2608 (20DMA) and 1.2634 (30DMA).
Caution on strong bearish momentum and daily MA’s still in full bearish setup that may limit recovery.
Res: 1.2540; 1.2570; 1.2608; 1.2634
Sup: 1.2500; 1.2481; 1.2440; 1.2397