The 1.2110 level is the key area to watch ahead of the daily, weekly close
The 1.2110 level coincides with the March 2017 low as well as the trendline support that stretches back to August last year.
Although we have seen price break below the 1.2100 level yesterday, buyers are still clinging on for now to prevent the technical picture from becoming even more ugly.
As for key risk events up ahead, all eyes will be on the US jobs report to provide traders with some clues on where to take the pair as we look to close out the week.
As such, a more solid report that may boost the dollar could help push the pair below the key support levels mentioned above and open up the path towards the 1.2000 handle next.
However, should cable move higher on further short covering, be mindful about yesterday’s high @ 1.2171 which is also near the 100-hour moving average @ 1.2170.
If price starts challenging a break above the key near-term resistance there, it could help provide further relief following a dreadful past week for the pound in which cable has fallen from 1.2500 to where we are now.
Fundamentally, I don’t see a reason for the pound to sustain gains but with the Brexit focus more measured in August (lawmakers are on their summer break), we could see traders take some money off the table before getting back in the game in September.