GBP/USD trades at its lowest levels since 1 June
The retracement in cable is building further as price action now falls back under 1.2500 with sellers keeping the downside momentum going amid the softer risk mood.
The dollar is firming across the board as such, with equities seen falling sharply and traders leaning towards a flight to safety to kick start the new week.
Technical levels are of real importance in times like these and the cable chart continues to reaffirm that the bias is working more in favour of sellers now.
Of note, the drop today takes price action firmly under the 100-day MA (red line) @ 1.2534 and also the 38.2 retracement level of the swing move higher since mid-May @ 1.2531.
That puts sellers more in control and keeping a break under the 1.2500 handle is just another tick off the box in terms of assessing the current conviction.
Further support is now seen closer to the 50.0 retracement level @ 1.2444 next.
For now, keep below 1.2500 and that is an important level for sellers to maintain the downside pressure. But ultimately, the 100-day MA is where risk levels will be defined and limited given the current price momentum based on the charts.
Much like before, the dollar side of the equation remains the “priority” given how much the market is driven by the risk mood at the moment.
But this week, the pound side of the equation is also one to take note of as we will have EU-UK high level talks later today, the UK labour market report tomorrow, UK inflation data on Wednesday, and the BOE meeting on Thursday to follow.