GBP/USD gains by 0.5% as the dollar slips to start the session
As cable pushes gains on the day, it is nearing a test of the 200-day MA (blue line) @ 1.2678 once again. This has been the level that limited its upside move back in April and will be a key spot to watch over the next few sessions.
Break above that and the bias in the pairs turns more bullish and the technical breakout is suggestive of a stronger push, potentially towards 1.3000 next.
Keep below that and sellers will have a key area to lean on once again, with a third rejection of the level likely to reinforce stronger downside momentum in the coming days.
The dollar side of the equation remains the key driver at the moment but as we look towards the weekend and the start of trading next week, be wary of the pound.
The latest round of Brexit negotiations is set to conclude today and we may be hearing from the EU and UK side on how things are progressing – or not progressing should I say.
That may help to keep pound gains in-check should both sides reaffirm a lack of progression towards getting a compromise before the 30 June deadline to extend the Brexit transition period beyond the end of this year.
For now, the 200-day MA will be the key battleground. Buyers still have some support from the 100-day MA (red line) @ 1.2560 but unless they can find enough conviction to break higher, the recent rally in cable looks a little tricky amid potential Brexit issues.