GBP/USD is keeping softer on the day but buyers are maintaining a defense of the 200-hour moving average for now
The pound is a tad softer on the day so far, but that also owes to some firmness in the dollar amid the softer risk tilt in European morning trade.
Cable moved to a low of 1.2806 earlier but buyers are putting up a bit of a defense with price action now moving back to 1.2820-30 levels.
The slight bounce comes as we see price action test the 200-hour MA (blue line) @ 1.2809 with the 100-hour MA (red line) not far away @ 1.2801.
The confluence of the key hourly moving averages are the key near-term technical level to watch moving forward, as a break below that will see sellers resume near-term control and build further momentum for a push lower.
As things stand, the defense above signifies that buyers are also still hanging on to hopes of a more optimistic outcome in Brexit negotiations this week.
There are murmurs that talks are leading nowhere still but I would argue that such a conclusion would not be surprising given that there are still two weeks for both sides to "work things out" before the European Council meeting on 14-15 October.
If anything, both sides should reiterate some "progress" this week but more crucial negotiations will continue in the run up to the meeting i.e. can kicked down the road.
The market can either see that as a glass half-full or glass half-empty i.e. negotiations moving towards a deal or negotiations seen stalling once more a la Brexit tradition.
But the impact will be more easily identified in the charts. For any disappointment and downside pressure on the pound, the key near-term levels highlighted above will be the main spot to watch if cable were to break towards 1.2700 again.
Meanwhile, for any potential topside run, getting above resistance around 1.2880-00 and closing above that will be key for buyers.
Thereafter, the 1.3000 handle will come into focus but it may not be a straightforward play with plenty of potential setbacks still possible over the next two weeks.
