Weak UK inflation could hurt pound
Cable is holding within tight range in early Wednesday’s trading ahead of UK inflation report.
Near-term action is biased lower after daily Tenkan-sen (1.2870) repeatedly capped and Tuesday’s action ended in Doji candle, with uncertainty over UK elections, contributing to negative outlook
Techs are mixed on daily chart and lack clearer direction signal, with fundamentals likely to be the key driver today.
Headline CPI is expected to ease in October (y/y 1.6% f/c vs 1.7% prev) which is the lowest in over two years.
Release at or below forecast (which is also possible scenario) would hurt sterling and generate stronger signals for the BoE for rate cut, as the latest minutes showed no more unanimous vote for unchanged policy.
Initial support lays at 1.2819 (Fibo 23.6%) followed by more significant 1.2768 level (8 Nov low) loss of which would expose pivots at 1.2700 zone (200DMA (Fibo 38.2% of 1.2195/1.3012 bull-leg).
Daily Tenkan-sen marks the upper pivot and close above would sideline immediate downside risk.
Res: 1.2845; 1.2870; 1.2897; 1.2942
Sup: 1.2819; 1.2768; 1.2739; 1.2700