The pound drops quickly from 1.3730 to near 1.3670 to start the session
A firmer dollar from higher Treasury yields is one reason to go with so far today but the extensive correction higher in EUR/GBP also isn't helping with pound sentiment this week, as cable now falls to its lowest level since 25 March.
That is proving to be a bit of a double-whammy for cable to start the session as price now falls towards the 25 March low of 1.3670 and the 100-day moving average (red line) @ 1.3675. That will be the key downside levels to watch ahead of the close today.
Keep above that and buyers are still in with a fighting chance to stick with a potential rebound but break below and that presents a slippery slope for the pair next.
There is some added support from the 38.2 retracement level @ 1.3643 but beyond that, it is slim pickings in trying to pinpoint a particular support level to hold.
Despite all the optimism surrounding UK economic prospects, the charts are a tough one to argue with as evident by the EUR/GBP push this week. The spillover from there is quite evident across pound pairs and cable is no exception.
The only positive for the pound is that the latest setback this week may still be largely viewed as a correction rather than a shift in the trend, but we'll have to reassess things once again when the quid manages to find its footing eventually.
