- GBP has remained relatively unchanged after briefly crossing below the 1.22 level
- Bearish pressure remains despite better than expected UK data
Price action over the last few days suggests that the pound is set to remain under the 1.23 mark and is likely to extend its losses as prices fail to push above the 50 EMA at 1.2276.
The 1.22 area continues to act as a key psychological support whilst the 1.2250 area and the 50 DMA limit any real upside in cable.
Prices are currently trading in a falling wedge structure on the 45 minute timeframe. Price has respected this structure so far, with the last lower low being created at the bottom support trendline of the wedge. Prices are currently heading towards the upside trendline resistance of the wedge at around 1.22650 , however 1.2250 remains as a key resistance level to watch.
Price signals for this pair remain relatively limited albeit with a broadly negative trend.
Although manufacturing and services data surpassed expectations, they remained firmly in contractionary territory, capping any real upside for cable.
Despite this, GBP has held on to its gains from earlier this week, in spite of speculation over negative rates at the BOE. It is interesting to note that the Gov Bailey did not dismiss this possibility in yesterdays conference, though remained firm that this would not be around the corner and that it would be ‘foolish’ to rule out other policies at this point.
GBP is likely to underperform in the coming weeks on Brexit risks and a lockdown exit strategy which is still unclear.