Upbeat UK earnings inflate sterling but bulls continue to struggle at daily cloud base
Cable regained traction and bounced from session low at 1.2306, hit on pre-UK jobs data 70-pips drop, as overall positive data inflated pound.
Earnings rose 4% in July vs 3.7% f/c, showing the biggest pay rise since 2008, while unemployment fell in July to the lowest since mid-1970’s (3.8%).
Slowdown in hiring in the UK overshadowed positive signals, as data showed 31K new jobs created in three months to July, well below forecasted 53K and previous period’s 115K figure.
Upbeat earnings add to positive signals from solid UK GDP data, released on Monday, hitting those advocating for BOE rate cut towards the end of the year.
Solid data keep pound afloat, but the pair continues to face strong headwinds from falling and thickening daily cloud, with strong momentum being partially offset stochastic reversing in overbought territory on daily chart.
Repeated close below daily cloud base would generate initial signal of recovery stall and keep the downside vulnerable, but confirmation of negative scenario would require dip and close below converging 10/20DMA’s (1.2224/1.2199).
Conversely, bullish signals could be expected on lift and close above daily cloud base (1.2346) and Fibo 50% of 1.2783/1.1958 (1.2370).
Brexit developments remain in focus as key driver of British pound.
Res: 1.2346; 1.2370; 1.2384; 1.2431
Sup: 1.2306; 1.2273; 1.2233; 1.2224