$1.3000/07 Remains Hurdle For Upside Progress

Cable recovery faltered Thursday at $1.2970 before dropping back to $1.2892 with traders suggesting that failure to build up momentum to force a decent break above $1.3000 prompted short term longs to cover back. A clear break of $1.3000 seen needing something definite to come out of current Brexit negotiations, on that note EU Barnier is due in London today for further talks, with PM Johnson's deadline approaching on Oct15. However, several think talks will continue in a hope a deal can be hammered out by the end of October. Cable recovered through NY to $1.2948, closing the day at $1.2938. Opening Asian trade saw rate dip to $1.2923 before fresh demand emerged, though early recovery efforts were capped at $1.2940. Level eventually gave way as risk was given a lift by the CNY fix, added to by better than forecast Caixin Svcs PMI, which allowed cable to edge to $1.2959. However, improved risk outlook only producing tentative rallies with this $1.3000/10 area seen providing a difficult hurdle to upside progress. Cable retreat has picked up some momentum into early Europe, rate currently trades around $1.2940. Support seen at $1.2923/20, $1.2900/1.2890. Resistance $1.2960/70, $1.3000/07.

MNI Techs: GBPUSD has recovered off recent lows. Despite this, the focus is on Tuesday's price action that highlights a bearish reversal signal. In Japanese candle terms, activity on Oct 6 is an engulfing pattern and signals the end of the recent corrective bounce. A break of 1.2846, Oct 7 low would open 1.2806, Sep 30 low and potentially 1.2676, Sep 23 low. On the upside, key resistance remains 1.3007, a breach would be bullish and alter the picture.