New UK stimulus measures result in impressive recovery in early Friday’s trading
Cable is in recovery mode on Friday and gained 3.3% on bounce from 1.1465 (Asian low) to 1.1876 (early European session high).
Thursday’s unscheduled BoE rate cut and a increase of QE, boosted the sentiment, with fresh easing of US dollar after massive gains, adding to positive near-term outlook.
Recovery so far retraced slightly more than Fibo 23.6% of 1.3199/1.1409 fall, with signals of further advance developing on daily chart as momentum is rising and RSI and stochastic attempting to emerge from oversold territory.
Signs of further stimulus measures from the government would keep the pound supported in the near term.
Although the advance so far looks like profit-taking and positioning for fresh weakness, it may provide some signals for quick jump into recovery rally.
Fresh bulls eye significant barriers at 1.20 (psychological) and 1.2093 (Fibo 38.2% of 1.3199/1.1409) and break here would signal stronger recovery.
Change of traders’ sentiment is essential and if confidence rises, near-term bias would turn positive and inflate pound.
Caution on signs of recovery stall that would shift near-term focus lower.
Res: 1.1877; 1.2000; 1.2093; 1.2129
Sup: 1.1808; 1.1793; 1.1698; 1.1588