Brexit dominates the agenda again and yesterday saw GBPUSD drop 200 pips on the release of ICM Polling Data putting the Brexit camp in a narrow 52 to 48 lead.
Cable traders (and those in GBP generally) should be tuned in to the news at all time as polling releases have been demonstrated to have a strong and immediate impact, particularly in yesterday’s case where it perhaps turned the tide of sentiment.
Today we see US and UK PMI at 09.30 and 13.30 respectively (GMT+1). UK PMI is forecast to be below 50 but a slight improvement on last month – no major movement expected. US PMI is forecast to be positive (above 50) but a slight decrease on last month. A material miss for US PMI will soften the dollar by hinting to a general slowing in the economy.
Risk to the pair appears to be to the downside with a solid dollar for the moment and sentimentally bearish pound on Brexit polling data (although this may only last as long as the time to the next poll).
The pair will react strongly to any upcoming Brexit polling releases – Remain in the lead boosts GBP and Brexit tanks it.
Yesterday’s slump leaves price trapped between resistance at about 1.45 and pushing against the lower end of a long term rising channel at support and the weekly S1 pivot.
This lines through with a recent previous level of support, and the stochastic oversold on the H4 timeframe so we might see a rally in the absence of other decisive data.
In that case I would look to sell where resistance is met between the 38.2 and 61.8 retracement. Other than that it appears that risk is to the downside.