Cable back down to test the 200-hour moving average again
The bounce after the inflation data beat earlier was very much short-lived with gains even failing to surpass the 100-hour MA (red line) @ 1.3023. As such, the pound is brought back lower to test the 200-hour MA (blue line) @ 1.2979 once again.
A break below that will see sellers regain near-term control with further support seen around the region close to 1.2950 before the 1.2900 level comes into play.
Looking ahead, the focus for the quid will turn towards retail sales data tomorrow and PMI readings on Friday for a sense of how the UK economy is performing to start the year.
Any major hiccups there may precipitate some added weakness in the currency towards the end of the week, as it will trigger some near-term concerns for the BOE to act.
Post-Brexit trade negotiations will also be one to watch in the weeks ahead, so be wary of potential headlines during the interim as well.
