Price is keeping around 1.3030-45 for the time being as the market continues to hold steadier in trading today. Traders are largely taking in coronavirus headlines in stride but with US markets closed, any major risk push may have to wait until tomorrow for confirmation.
For cable, the late Friday drop was defended around 1.3000 before price rebounded back towards 1.3030-50 levels as what we are seeing now. Topside momentum is further limited by the 5 February high @ 1.3070 and the 61.8 retracement level at 1.3084.
Despite the steadier tone for cable so far today, things may quickly change in the days ahead as we will have quite a number of key economic releases to go through:
Tuesday: UK average weekly earnings, labour market data
Wednesday: UK inflation data
Thursday: UK retail sales data
Friday: UK flash manufacturing, services, composite PMI data
Not to mention the potential for headlines surrounding post-Brexit trade negotiations, which are set to begin in a few weeks' time.
The key releases to watch in my view will be inflation and PMI data. Any hiccup in these releases may see the BOE get called upon to act sooner rather than later, as post-election euphoria may prove to be short-lived.
Even as Boris Johnson may be preparing a substantial fiscal boost next month, it may not necessarily do enough to prevent the UK from falling into the inflation trap. And that is a risk for the BOE and the pound if price pressures continue to wane.
For now, topside remains limited around 1.3070-84 with further resistance seen closer to 1.3100 and then 1.3134, before approaching the 1.3200 level.
Meanwhile, downside support is seen closer to 1.3000 with the key hourly moving averages also seen around there (100-hour MA) and 1.2970 (200-hour MA).