GBP/USD buyers are enjoying a good spell at the moment
With price bias in the near-term more bullish and the fact that price is trading in a neat uptrend channel, things are looking rather well for cable bulls at the moment. For now, hold above 1.3100 and price momentum remains more bullish today with resistance seen from the upwards trendline around 1.3147 currently.
But the larger story here isn’t just about the pound advancing against the dollar. The BOE offered little or basically nothing new yesterday and so far Brexit rhetoric has somewhat cooled down a little over the last two days.
This has been more of a dollar weakening story more than anything else. With the greenback already weaker from yesterday’s CPI report, add to the fact that technical levels are potentially starting to give way (EUR/USD looks to break above the 100-day MA, DXY looks to break below the 100-day MA), things are starting to look more dollar negative for the time being.
As for cable, from a technical perspective, the pair now looks to be running towards a test of the 100-day MA (red line) as well. That currently sits at 1.3180. Much like EUR/USD, price has not moved above the 100-day MA since mid-April. So, a break higher beyond that is a significant level to breach for buyers.
But for cable, things are a little different with Brexit also part of the mix and headline risks can potentially skew the pound back lower. That is something to look out for. But technically, hold above 1.3100 and the bias is more bullish towards testing further upside at this point. A break of the 100-day MA would represent a significant win for buyers in the context of what has been a torrid last six months for the pound.