Sterling extends recovery ahead of Fed

Cable accelerated higher in US trading on Wednesday, boosted by profit taking from last week’s fall and solid UK inflation data.
The move can be also seen as positioning ahead of key event today, Fed rate decision, as wide expectations for keeping rates unchanged, may further inflate pound.
Rising bullish momentum supports the advance, along with daily stochastic that reversed from oversold territory and heads north.
Bulls test resistance at 1.2634 (daily Tenkan-sen / 50% retracement of 1.2762/1.2505), break of which will expose pivotal barriers at 1.2650/65 zone (converged 10/20SMA’s / Fibo 61.8%).
Surprise action from Fed in unexpected rate cut would offer stronger support to sterling and prompt extension towards key barriers at 1.2758/62 (12/7 June highs).
Otherwise, fresh easing can be expected if Fed decision comes in line with expectations, however, comments from Fed chief Jerome Powell will be closely watched for fresh signals about central bank’s next steps.

Res: 1.2650; 1.2665; 1.2702; 1.2714
Sup: 1.2608; 1.2569; 1.2542; 1.2505