Cable Hits Three-Week Low Due to Dovish Rate Outlook and Disappointing Economic Data

The British pound extended its losses on Thursday, dropping over 1% in the session as pressure mounted following dovish remarks from Bank of England Governor Andrew Bailey. Bailey hinted at the possibility of more aggressive rate cuts, heightening expectations for a 25-basis-point reduction at the November 7 policy meeting.

Adding to the bearish sentiment, the UK’s September Services PMI came in weaker than expected at 52.4, below both the forecast of 52.8 and August’s 53.7 reading, further weighing on sterling.

The recent decline from the 2024 high of 1.3434 (posted on September 26) deepened, with cable hitting its lowest level in three weeks. A break through the pivotal Fibonacci support at 1.3140 (38.2% retracement of the 1.2664/1.3434 rally) generated a fresh bearish signal.

On the technical side, momentum continues to weaken, as the 14-day momentum indicator cracks below the centerline, and the 10- and 20-day moving averages are converging above the price, with a potential bear-cross forming.

A close below the 1.3140 level would confirm this bearish signal, opening the door for further declines toward key targets at 1.3049/32 (50% retracement, 55-day moving average, and daily cloud top), and the psychological level of 1.3000. A break below 1.3000 would confirm a reversal of the broader uptrend from 1.2299 to 1.3434.

Res: 1.3140; 1.3200; 1.3217; 1.3252
Sup: 1.3100; 1.3032; 1.3000; 1.2958