GBP/USD establishes a near-term double-top pattern around 1.3300
The pair ran into the high from last week of 1.3312 before slipping in trading yesterday, as the dollar also gathered some late traction on a more risk-off push.
That saw cable ease from around 1.3260 to a low of 1.3224 earlier but buyers defended a push against the 100-hour MA (red line) to keep near-term control in the pair.
As we start European morning trade, we are seeing price action settle just above that around 1.3240 levels. As we look towards the weekend, cable is going to be one of the trickier pairs to navigate over the next few sessions.
There are a couple of moving parts influencing the pound and the dollar and that will ultimately swing the pair in either direction one way or another.
However, at least we can rely on the technicals for some sort of indication on the strength of the bias in the market when the time comes.
For sellers, the 1.3300 level is still the key region to watch as confirmed by the near-term double-top pattern from yesterday.
As for buyers, the confluence of the key hourly moving averages at 1.3210-25 and the 1.3200 level are now the key areas to focus on in case we see a downside extension.
Now that we have established the key risk levels, let’s identify the fundamentals instead.
On the dollar side of the equation, we are still doing battle on the risk front with the market mood keeping more guarded and cautious to start the session.
The latest push lower in risk late yesterday saw the S&P 500 break below 3,600 and its 2 September high of 3,588, so that keeps risk sellers in the game as buyers lose grip on the upside momentum ahead of the next few sessions.
So, those levels will also help in defining the risk bias in the dollar later in the day.
As for the pound, it is still all about Brexit negotiations as we continue to wait and see how things will play out in Brussels. Talks may extend into the weekend if there are any “progress” so that leaves for a risk of a gap going into Monday potentially.
The outcome can pretty much swing either side and the best we can do is to use the technical levels above as a gauge of the momentum in the swing.
Just be mindful of the earlier EU report mentioned above as well, as it could tie to some added political posturing ahead of tomorrow’s EU communique by Barnier and member states following the end of discussions this week.