Sterling collapses on fresh signals of hard Brexit
Cable collapsed in early European trading on Wednesday on media report that Britain’s Queen Elizabeth could be asked to agree to suspend parliament, in order to prevent blocking the plan of PM Johnson to leave the EU on 31 Oct, with or without a deal.
Sterling was down 1% since news came out.
The latest news further soured the sentiment that was already weak on persisting fears of hard Brexit.
Repeated failures at key barriers provided by trendline resistance (1.2286) and Fibo barrier at 1.2308, signaled that recovery was running out of steam, with fresh weakness through higher base at 1.2208 and more significant supports at 1.2197/85 (Fibo 38.2% of 1.2015/10DMA), generating reversal signal.
South-heading daily momentum (bearish divergence formed) and stochastic, support bearish scenario.
Bears pressure 20DMA (1.2147) and could extend towards next key support at 1.2127 (Fibo 61.8% of 1.2015/1.2309), break of which would confirm reversal and expose key 1.20 support zone.
Some profit-taking after sharp fall should be anticipated, with upticks to offer fresh selling opportunities, as bias is expected to remain with bears while the price action stays below bear-trendline.
Res: 1.2208; 1.2225; 1.2268; 1.2286
Sup: 1.2155; 1.2147; 1.2127; 1.2108