Slight positive tone ahead EU summit, UK data
Cable regained traction and moves higher in early European trading on Wednesday after Tuesday’s strong upside rejection at daily cloud top and daily action ending in Doji candle with long upper shadow.
All eyes are on today’s EU summit on Brexit, with slight optimism as no-deal scenario has been ruled out, but markets will be looking what sort of Brexit extension the EU will allow.
PM May favors short delay on hopes they will manage to make a break trough and have her plan finally approved by the parliament.
On the other side, the EU will likely insist on one-year extension if there will be no plan, but with option to leave earlier if conditions change.
Series of UK data today (GDP 0.2% f/c vs 0.5% prev / Industrial production Feb 0.1% f/c vs 0.6% prev / Manufacturing production Feb 0.2% f/c vs 0.8% prev) could also impact sterling, but Brexit remains key event and driver.
Tuesday’s failure to clearly break above 55SMA (1.3094) and daily cloud top (1.3110) could be initial negative signal, however, the downside risk would be limited as the price remains supported by rising trendline (drawn off 12 Dec low at 1.2476).
Key support lays at 1.2976 (200SMA) and sustained break here would generate strong bearish signal.
Conversely, close above daily cloud top (1.3110) would signal further advance.
Res: 1.3079; 1.3094; 1.3110; 1.3131
Sup: 1.3042; 1.3005; 1.2976; 1.2936