The pair dropped to a low of 1.2430 earlier as the dollar also firmed across the board, with USD/JPY came close to touching 133.00 for a brief period. But since then, the greenback has seen gains ease up as Treasury yields slip back a little and USD/JPY also coming down from 132.99 to 132.69 at the moment.
In turn, cable has produced a notable bounce from 1.2430 to 1.2533 in the past hour. The bounce is being stalled by familiar resistance from the 100-hour moving average (red line) at 1.2531 currently. The 200-hour moving average (blue line) will add to another layer of defense for sellers, seen at 1.2573 - as evident in the past few sessions.
There is a slight improvement in risk tones even if equities are keeping lower across the board. S&P 500 futures have trimmed losses from 0.6% to be down 0.3% now, with Nasdaq futures also seen down 0.4% from around 0.8% earlier. European indices are still lower across the board, with losses ranging around 0.4% to 0.7% mostly.
But the greenback's firmness is being contested as bond yields pull back a little on the session. 10-year Treasury yields are now down 1.7 bps to 3.02% after being just above 3.05% earlier in the day.
Going back to cable, it is tough to see much momentum for a break higher as long as risk tones remain sluggish and the dollar is steadying itself over the past few sessions. The defense of the key hourly moving averages only serves to reaffirm that sellers are in near-term control at the moment - going by the technical perspective at least.
Looking at the fundamentals, the Fed also remains more hawkish than the BOE and the UK's economic struggle will be a real test of resolve for Bailey & co. in the months ahead - even with surging inflation.