GBP/USD moves up to near a test of its 200-day moving average
It is all about dollar sentiment right now when it comes to cable trading and with the greenback not sitting well post-Jackson Hole, the momentum is seeing cable move up to near a test of its 200-day moving average (blue line) @ 1.3800 today.
That marks a key test for buyer to establish further control in the pair as they are also working through the 50.0 retracement level of the recent downswing @ 1.3793.
Those will be the two key levels to keep an eye out for, in particular the former, as we look towards the daily close later in the day.
There is somewhat of a double-bottom for the pair seen near 1.3600 and from a technical perspective, that is lending some momentum for buyers to work with.
That said, gains in the bigger picture may be more limited at 1.4000 considering that pound sentiment isn’t much changed and any such move towards that level would be a good opportunity for sellers to step back in – all things being equal.
I still don’t see the dollar suffering any significant deterioration beyond that as the Fed taper timeline is still intact.
I’m not a big fan of month-end trading so price action today may be a bit tricky to navigate despite the obvious dollar softness so far on the day.
From a technical perspective at least, a firm push and break above 1.3800 and the 200-day moving average puts buyers in a good spot for a further climb towards 1.3900 and perhaps the 100-day moving average (red line) just above that.
However, the US non-farm payrolls report on Friday is a key risk factor to consider so be wary of that as well in trading this week.