Sterling extends recovery on better than expected UK GDP; US NFP is next
Cable rose further in early Friday’s trading, extending the rally on Thursday (up nearly 0.80%) sparked by unexpected acceleration in US weekly jobless claims (strongest rise in five months).
Additional support for sterling came from UK GDP data which showed that economy grew by 0.3% in January after contracting by 0.5% in December and beating forecast for 0.1% expansion, adding to expectations for another BOE rate hike in the policy meeting on March 23.
All eyes are on US February non-farm payrolls, due later today (205K f/c vs 517K Jan), which is expected to offer more clues on the Fed’s next steps and provide fresh direction signal.
Technical studies on daily chart have improved after Thursday’s rally signaled formation of Doji reversal pattern and generated bullish signal on return and close above 200DMA.
However, fresh bulls will need more work at the upside to boost positive signal as moving averages (except 200DMA) remain in bearish setup and 14-d momentum is still in the negative territory.
Bulls face headwinds at initial barrier (10DMA at 1.1965), which guards more significant 1.2000/08 (psychological / 20DMA), 1.2049 (Fibo 38.2% of 1.2447/1.1802) and 1.2073 (base of falling weekly Ichimoku cloud).
Firm break of these barriers is needed to boost reversal signal and open way for stronger recovery, while early upside rejection would generate initial signal of recovery stall and keep in play risk of return to Wednesday’s low at 1.1802 (the lowest since late November).
Res: 1.1965; 1.2000; 1.2049; 1.2073
Sup: 1.1898; 1.1840; 1.1820; 1.1802