The dollar loses ground as trade optimism gets pushed back in the past hour
Cable just posted a high of 1.2725 as buyers are looking to try and break above the 100-hour MA (red line) @ 1.2714. Hold above that and the near-term bias in the pair will turn more bullish once again.
The bump higher comes after the dollar surrendered some ground following a WSJ report that tempered with trade optimism earlier. With the dollar focus being heavily on the Fed now, another break down in trade talks will spark worries about the Fed outlook and will no doubt see markets expecting more rate cuts by the Fed over the coming months.
Right now, cable is also contesting with resistance from the 23.6 retracement level @ 1.2718 so in the near-term buyers still have some work to do to establish some momentum for an extension higher.
Looking at the pound side of the equation, it's all about the Tory leadership race but we're getting to a point where it seems neither Johnson or Hunt knows how to win it.
Hunt didn't do himself any favours after calling 31 October a "fake deadline" and his refusal to commit to a Brexit stance is an off-putting factor as the race heats up. Meanwhile, Boris Johnson's all-over-the-place Brexit approach is creating a bit of a mess for himself and he's trying to get out of a corner after trapping himself earlier in the week.
In the bigger picture, all of this doesn't resolve the Brexit issue at hand and once the race is over and done with next month, expect the focus of Brexit uncertainty to continue to weigh on the pound in Q3 2019.
