Although the euro is gaining ground against the dollar, sterling continues to struggle with the politics of Brexit. Yesterday’s candle simply confirmed that rallies need to be treated as a chance to sell. The bull failure of closing all but at the low of a 95 pip range candle has reiterated the three week trend lower. The pressure is once more growing on the support around $1.2200 that has been a feature of the past few sessions. For now this is a support hanging on, but deteriorating momentum indicators reflect the growing pressure. MACD lines are now falling below neutral whilst Stochastics are back in bearish configuration and if the RSI closed below 40 it would really reflect the market breaking lower. A close below $1.2200 opens a move that would likely end with a test of $1.2000 again. The US/China trade talks are likely to create some near term volatility but we remain sellers into strength on Cable. Resistance in the band $1.2270/$1.2330.
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