Cable climbs back above 1.2100 to a session high of 1.2122
Buyers have seized back near-term control on the day upon breaking above the 200-hour MA (blue line) but the real test now for a further upside break will be the trendline resistance @ 1.2128 as well as the 23.6 retracement level @ 1.2134.
Those were the two levels that prevented a further run yesterday and will be the same key near-term resistance levels to watch out for today.
I'm still largely skeptical of any break higher in the pound considering Brexit uncertainty. However, with market focus on that being sidelined until September, the stretched short positioning adds to reason for the downside move to take a breather.
I would expect any major upside move to be limited around 1.22-23 as anything further will reinvigorate sellers to step back in considering that Brexit developments are little changed ahead of the UK parliament reconvening again next month.
There has been talk of strong resistance to oppose Boris Johnson pursuing a no-deal outcome but much like everything politics-related, it's all talk for now.
I'd only be more convinced of a pound recovery if we see stronger action that could potentially alter the current Brexit equation. Otherwise, I expect markets to continue offering the quid into any decent rallies in the coming weeks.