GBP/USD buyers looking to establish a firm upside break in the near-term
It’s very much a similar story to overnight trading before price broke higher but ran into resistance from the 38.2 retracement level @ 1.2571. That saw price retreat back below the 200-hour MA (blue line) as the dollar firmed before inching back higher today.
The move higher so far is largely attributed to a weaker dollar across the board and cable buyers are now contesting with the 200-hour MA @ 1.2541 once again.
Hold a break above that and the near-term bias will then turn more bullish but with sellers showing poise to also defend the 38.2 retracement level, the overnight highs will also be a key resistance level to watch out for in the near-term.
There hasn’t been too much movement so far in the European morning with dollar weakness still persistent for the most part. Yields are also looking a bit choppy with US 10-year yields back a little lower by 1.6 bps to 2.122% currently, so that is leading markets to be a bit unsettled in my view.
But as mentioned before, unless yields threaten to fall off dramatically, I reckon there’s still an argument for the dollar to find some support in the near-term amid all the chatter about the Fed cutting rates at the end of this month.