Sterling traders are gearing up for a busy session ahead, following a period of consolidation and relatively tight ranges over the past couple of days. Cable remains near recent lows, and while the overall movement of the dollar is likely to have a greater impact on the next breakout in Cable, tonight’s CPI numbers could prompt significant moves. Any result weaker than the expected 2.2% year-on-year print could lead to a swift challenge of the recent multi-month lows. Conversely, a stronger number might ease expectations of a Bank of England rate cut and trigger a pound rally.
Cable is currently trading just above these recent lows, with traders fading rallies over the past few sessions. However, a stronger CPI print could drive it higher toward the 200-day moving average at 1.2748 and possibly further to the trendline resistance near 1.2900. On the other hand, a reading below 2% (last month’s figure was 1.7%) might push it lower, with a clean break of 1.2600 opening the door to a deeper correction.
Resistance Levels:
- Resistance 2: 1.2902 – Trendline Resistance
- Resistance 1: 1.2748 – 200-Day Moving Average
Support Levels:
- Support 1: 1.2594 – November Low and Trendline Support
- Support 2: 1.2296 – 2024 Low
