GBP/USD falls back below the 1.2600 level
The chart pattern in cable mirrors what we are seeing in AUD/USD in recent weeks, as both pairs are largely driven by dollar flows and the risk mood more than anything else.
For cable, the topside move found a solid break above 1.2500 to start the week and buyers built on a move to head towards a test of the 200-day MA (blue line).
There wasn't much of a fight around the level though as risk aversion creeps back into the market today and is helping the dollar regain some lost ground. As a result, cable has backed off from the 200-day MA and is now under the 1.2600 level once again.
So far, price is trading at session lows around 1.2585-90 and not yet extending lower by much. That said, there isn't much near-term support in the pair all the way through to 1.2525-35 and then the 100-hour moving average at 1.2509 currently.
Those will be key near-term levels to watch in case sellers do start to chase a move to the downside. As for upside potential, the 200-day MA @ 1.2658 is the key line in the sand.
For trading today, it looks like risk will be a key factor to watch as investors appear to have a bit of a delayed reaction to earnings risk despite warnings from JP Morgan and Wells Fargo yesterday. US futures are down by about 0.7% currently.
However, sentiment in Wall Street will be a different beast to tackle altogether so let's see how things go later in the session. But for now, cable is sitting lower but any real downside momentum is yet to materialise after the price action in recent days.
