A more dovish BOE and a more hawkish Fed helped to set the tone last week, with a selloff in equities also helping the dollar recover well after the softer US CPI data just seven days ago (felt like much longer now, no?). That resulted in failed breakout attempt to the topside with price falling back below the August lows at 1.2276-93 and the 50.0 Fib retracement level of the swing lower from last year, seen at 1.2306 roughly.
The retreat has resulted in a push back towards the 200-day moving average (blue line) earlier today, seen at 1.2088 currently. That came amid some firmness in the dollar in Asia after a risk retreat on the BOJ but now we are seeing the pair hold higher instead. The switch comes as the greenback eases amid a decent rebound in the equities space ahead of US trading.
Going back to GBP/USD, dollar sentiment remains in the driver's seat at the moment and more so as risk sentiment is very much in play again after the BOJ delivered a surprise to markets earlier today.
That said, topside resistance is still seen at the key levels above while downside is also more limited closer to the 200-day moving average pointed out as well.
As such, something has got to give eventually but for now, GBP/USD buyers are not out of it yet despite the fall off since last week. Sellers may only look towards 1.2000 again following a break below the 200-day moving average, so that is the line in the sand at the moment.
