Sterling stands at the back foot at the beginning of key week for Britain
Cable eases further in early European trading on Monday, following failure to hold gains above pivotal Fibo support at 1.2535 (38.2% of 1.2783/1.2382), with action stalled on approach to falling 20DMA (1.2555).
Fresh weakness probes below daily Tenkan-sen (1.2480) with close below to generate reversal signal and risk deeper fall, as momentum remains deeply in the negative territory on daily chart and MA’s are in bearish setup.
This week is key Britain, as new PM will be announced on Tuesday, with political turmoil gaining pace after British Finance Minister said he will resign if Boris Johnson became prime minister.
Fears of no-deal Brexit under Johnson’s leadership are rising, although he said that free trade deal with the EU could be reached that could break Brexit deadlock on Northern Irish backstop, on borders between Norther Ireland province Northern Ireland and EU member Ireland.
All cards remain on the table, with pressure on pound expected to increase on signs of no significant progress in Brexit process.
Alternative scenario on lift above pivotal barriers at 1.2555 (20DMA) and 1.2580 zone (12 July high / 30DMA) could be expected on more optimistic news.
Res: 1.2495; 1.2535; 1.2555; 1.2580
Sup: 1.2475; 1.2439; 1.2425; 1.2382