GBP/USD eases back under the 1.1600 level
The pair was trading close to the 1.1700 level at the start of the European morning about three hours ago but has now eased back lower under 1.1600 as the greenback keeps firmer and erases its earlier losses against the likes of the euro and franc as well.
For cable, it is but another futile attempt for buyers in trying to seize near-term control after failing to firmly break the 100-hour MA (red line) last week.
That sits at 1.1749 currently and is a key resistance level to watch in the sessions ahead.
As such, sellers continue to maintain a more bearish near-term bias but so far the pound is consolidating losses just above the 1.1500 level after a dramatic fall from 1.3200 over the past two weeks.
Technically, a firm break under the 1.1500 level and below the low last week of 1.1412 will set off more alarm bells on a move to the downside. Meanwhile, a move back above the 100-hour MA will be a step in the right direction for buyers in the near-term.
However, fundamentally there are a few things to watch out for in trading today/this week.
1. Dollar funding pressures/Flow into dollars continue to persist
2. US coronavirus bill still up in limbo ahead of vote later today
3. UK coronavirus developments are still uncertain as lockdown measures still awaited
4. US jobless claims report set to be a blowout figure on Thursday
5. Valuation for sterling is at multi-decade lows, a cheap long-term trade?
Plenty of moving parts and also plenty of volatility in the market still at play. I would argue that despite the dollar seeing a bit of a mood swing this morning, the market is still keeping relatively calm for the most part.
European equities are down but not bleeding profusely, while US futures are lower but not at limit-down levels (just over 3% losses currently).
As such, there is still plenty to play for in the course of the week but for cable, keep an eye on those technical levels mentioned. Those will be key to define or limit risk in case the fundamentals shift around to create opportunities to play.
