Cable firmed in early Wednesday’s trading after hitting nine-week high on Tuesday (1.2800), but subsequently pulling back on unexpectedly strong rise in US consumer confidence in May, which temporarily inflated dollar.
Broken Fibo barrier at 1.2753 (76.4% of 1.2893/1.2299) reverted to solid support (reinforced by 5DMA, which so far holds dips, however risk of deeper pullback is still present as 14-d momentum turns south from extreme highs and RSI is in sideways mode, just under the overbought zone borderline.
This could be seen as initial warning, although MA’s are still in full bullish setup and continue to head north, suggesting cautious approach and bullish bias above 1.2753.
Sterling enjoys support from fading hopes for BoE June rate cut, but some price adjustment cannot be ruled out on stretched daily studies.
Rising 10DMA offers next support at 1.2722, followed by a higher low of May 24 (1.2675) and broken Fibo 61.8% (1.2666) which should ideally contain and keep larger bulls intact.
Release of US inflation data (PCE) on Friday will be closely watched for fresh signals.
Res: 1.2803; 1.2823; 1.2893; 1.2995.
Sup: 1.2745; 1.2722; 1.2666; 1.2635.
