Sterling is sharply lower on Monday on political uncertainty
Cable was sharply lower in early Monday’s trading after negative news for PM May were released during the weekend and pound remains vulnerable as Brexit talks face key deadlines.
The pair slipped below strong 1.3110 support (Fibo 61.8% of 1.2773/1.3655 upleg / 100SMA) on extended bearish acceleration at the beginning of European session, shifting near-term bias lower after Friday’s unsuccessful probe into daily cloud.
Cloud is spanned between 1.3214 and 1.3275 and continues to weigh.
Monday’s weakness retraced 76.4% of recovery rally from 1.3038 (03 Nov low) to 1.3229 (Friday’s peak), signaling an end of corrective phase.
Dips were so far held by temporary base at 1.3083, with retest of key short-term supports at 1.3026 (06 Oct) and 1.3038, which also mark the floor of five-week range, seen as likely near-term scenario.
Daily studies are turning into full bearish setup and support the notion, with loss of 1.3038/26 pivots, as well as psychological 1.3000 support, expected to spark further weakness.
Extended upticks should be capped by descending 10/20 SMA’s (1.3155/68 respectively) before bears resume.
Only bullish acceleration through daily cloud would neutralize and shift near-term focus higher.
Res: 1.3109; 1.3155; 1.3168; 1.3188
Sup: 1.3083; 1.3057; 1.3038; 1.3026