As expected in the morning update, pair suffered losses after having failed to sustain above 5-DMA. However, the losses were cut short at 1.2850 after news Andrea Leadsom quit Tory leadership race. Theresa May now looks set to be crowned Prime Minister.
Pair’s sharp reversal from 1.2850 has kept the bullish price-RSI divergence on the 4-hr chart intact and thus odds of a bullish break from falling channel have increased.
Such a move would open doors for a corrective rally to 1.3315 (23.6% of 1.5019-1.2789).
On the other hand, another failure at 1.30 if followed by a break below today’s low of 1.2850 would signal a possible break below 1.2789 and further drop to 1.26 handle.