Cable is keeping its advance after a break above 1.2500 yesterday
The dollar weakness is also part of the story but overall, the pound is holding its own so far to start the week as it squeezes out decent gains in trading today.
Cable is staying above the 1.2500 level as most markets in Europe return from the long weekend and that in itself is a good sign for the pound already.
Notably, price action is now looking to hold a break above the 61.8 retracement level @ 1.2517 as buyers go in search of a move towards the 200-day MA (blue line) next.
Beyond that level, further resistance is only seen closer to the late February/early March lows around 1.2726-40 before the 100-day MA (red line) steps into the picture.
For now, it's baby steps as traders get back into the rhythm of things after the break. Keeping above 1.2500 and the 61.8 retracement level @ 1.2517 will be essential for buyers. Next up, will be a potential test of the 200-day MA @ 1.2657 currently.
As for fundamentals, the dollar side of the equation remains a tricky part as the market weighs up recent Fed action and how that has helped to bolster risk sentiment, along with the gloom and doom that may come from earnings season starting today.
Meanwhile, the pound side of the equation is more quiet but should not go unnoticed. The UK and EU are set to lay out post-Brexit trade negotiations planning tomorrow and time is slowly running out to make any progress towards a trade agreement.
But for now, the big focus remains on virus developments so let's see how that and the clash between the more upbeat risk mood and some earnings calls later today will pan out.
