Round Number Broken: Can This Momentum Be Maintained?
|S1: $1.2966||R1: $1.3050|
|S2: $1.2930||R2: $1.3062|
|S3: $1.2853||R3: $1.3082|
Sterling pushed through round-number resistance against the US dollar on Tuesday and closed above $1.30 for the first time since Aug 14th. It’s tempting to write this move off as purely a function of Dollar weakness, except for the fact that GBP made gains vs the EUR & CHF at the same time. Next week’s calendar is full of important Sterling related macro data.
Tuesday’s candle was the most bullish Cable has seen since mid-July and it took us to a high of 1.3042 intraday – a level that was beaten unconvincingly on Wednesday. We now look to retest old support and resistance from late July which is aided by rising momentum, as indicated by 20-day ema crossing over its 50-day peer from below.
There has been little UK macro data this week which was on the weak side of expectations. That said, some analysts at large banks now believe that current GBP levels are fully discounting shorter-term macro risks. Key UK inflation, earnings data and the Bank of England interest rate meeting are among the items due next week.