Cable had another bad day yesterday even though the UK services PMI for March showed a slight uptick in the pace of expansion in the service sector. An early attempt at 50-DMA of 1.4278 had failed and the bulls never really recovered from it. Thus, pair kept losing ground right till the NY closing. A batch of better-than-expected US services PMI reports – Markit and ISM non-manufacturing – only added to the pain. The pair clocked a low of 1.4122 before trimming gains slightly to end the day at 1.4159 levels.
No major UK data is due for release today; hence the spot is left at the mercy of the overall market sentiment. Not to forget Brexit fears which could regain control of GBP pairs on slightest of pro-Brexit newsflow. Later in the NY session, caution may take over ahead of the FOMC minutes release. Meanwhile, Fed speak is likely to reiterate possibility of two rate this year/or an early rate hike.
Technicals – Watch out for a break above 23.6% fibo level
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Cable breached falling rising trend line support on the daily chart, although move lacked conviction and thus a rebound from 1.4154 (38.2% of 1.4669-1.3835) – 1.4165 (23.6% of 1.5230-1.3835) would open doors for a break above 1.4273 (50-DMA) and rise to 1.43 levels.
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Beyond 1.43, next hurdle is noted at 1.4330 (23.6% of 1.5930-1.3835).
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On the other hand, a repeated failure to take out rising trend line resistance seen today at 1.4170 followed by a break below 1.4117 would signal a short-term is in place at 1.4459 and shift risk in favor of a drop to 1.4079 (Jan 21 low).
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A violation there would expose 1.4032 (23.6% of 1.4669-1.3835).
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