Cable now moves back towards the 1.2300 level
The pound started the day on a softer note with cable easing to 1.2210 after news over the weekend that UK prime minister Boris Johnson was hospitalised amid persistent coronavirus symptoms, with a rumour even saying that he required ventilator support.
But the latest update by UK housing secretary, Robert Jenrick, has helped to soothe fears of any impending political complications as he heard that Johnson is “doing well”.
Cable is now keeping near session highs close to the 1.2300 level but more notably price is keeping above the 200-hour MA (blue line) @ 1.2268.
So far, the confluence of support around the 23.6 retracement level @ 1.2232 and the level noted above is keeping the pair afloat with the dollar in a mixed spot to start the week.
The softer touch in risk is keeping the dollar pressured against commodity currencies but the greenback is advancing against the yen. It is still early days to call for any major turning point in risk so expect dollar flows to remain mixed for now.
Emerging market pressures and persistent economic worries with the ongoing lockdowns globally should keep dollar flows supportive. But the near-term cheer in the risk backdrop could offset that a little as seen so far on the day.
For the pound, the situation is more complicated as we are still yet to see the peak in the virus outbreak in the UK. The economic response had been good on paper but is lacking the kind of solid execution to address problems caused by the virus outbreak.
Then, there’s also the fact that post-Brexit trade talks are still hanging in the balance. Time is ticking away and we’re only left with three months of negotiations to go.
From a technical perspective, the recovery in the pound is decent but the 100-hour MA (red line) @ 1.2354 will pose a challenge for buyers in the near-term.