Cable dragged down to a low of 1.2812 on the day
The move here is a bit isolated to the pound with EUR/GBP rising to the highs of the day at 0.9020 as well. The fall in cable is seeing it move towards a test of bids and support from the swing region around 1.2800-10.
There's also additional support just under there in the form of the 23.6 retracement level @ 1.2792. But the sentiment is not looking pretty for the pound right now.
The key risk event to come will be the August services and composite PMI readings due at 0830 GMT (at the bottom of the hour). Earlier this week, the manufacturing and construction prints disappointed and market positioning suggests that traders are anticipating a weaker release as well.
Given that, a hefty beat will see the pound squeeze out some gains but given the backdrop of the trading theme this week, it's another opportunity to sell on rallies when that happens if you ask me. And that will remain the play for now unless something changes with regards to the Brexit rhetoric.
Support
- 1.2800-10 (bids, swing region)
- 1.2792 (23.6 retracement level)
- 1.2740-50 (swing region)
- 1.2700 (bids, August lows)
Resistance
- 1.2847 (100-bar MA on H4)
- 1.2873 (38.2 retracement level)
- 1.2900 (offers, swing region)
- 1.2930-38 (200-bar MA on H4, 50.0 retracement level)
