Support – 1.4441, 1.4388, 1.4368
- Cable’s rebound from 100-SMA yesterday followed by a break above 1.4441 indicates a short-term bottom is in place at 1.4332, although move would gain credence in case resistance at 1.4549 is breached.
- Rejection at 1.45 followed by a break below 1.4441 (falling support) would once again shift momentum in favor of bears and expose 1.44.
- On a larger scheme of things, crossover between 21-day and 55-day means dips are likely to be met with fresh bids.
- Hence, a possible drop to near 1.4441 on weaker UK data if followed by a rebound could see the pair cut through 1.45 and move towards 1.4549 levels.
Nears 38.2% Fibo
Cable neared 1.45 levels in Asia today, which is 38.2% Fibo level of 1.4770-1.4332. Prices witnessed an upside break from the expanding channel on hourly in the NY session and extended gains to 1.4441, above which fresh bids took control of the pair.
Eyes UK CPI data
Bank of England’s Quarterly Report (QIR) released last week showed is expected to pick up in the medium term, given the rally in oil prices. The PMI indices released in the first week of the current month had also pointed to higher price pressures. Consequently, cost of living as represented by consumer price index ( CPI ) for April is seen improving. Markets may have already priced-in the same, which explains the rise in Sterling in overnight/Asian trade.
Hence, a break above 1.45 and move towards resistance at 1.4549 would require a better-than-expected CPI and core CPI release. Anything below estimate or in-line with estimate leaves the doors open for a down move. Fall would be greater if the rebound in is slower-than-expected.