GBP/USD touches a session low of 1.2662

GBP/USD H1 21-06

The dollar is putting up a steady front in trading today as it is extending its advance against the likes of the pound, aussie and kiwi on the session. Even USD/JPY is testing session highs currently just above 107.50.

There isn't any notable headlines to cause the moves here but it once again highlights that you can never count out the dollar, not when other currencies still have many of their own problems. In the case of the pound, it's Brexit uncertainty and that will continue to keep tabs on any pound gains until there is more clarity offered to traders.

For cable, price now descends towards minor resistance around 1.2662 before the 200-hour MA (blue line) @ 1.2645 will be eyed by sellers. Should price revisit and move below that level, the near-term bullish bias will be broken. That is the risk for buyers now.

As mentioned yesterday, despite all the dovish Fed talk, unless markets are convinced that the Fed needs to cut by 50 bps in July, it's tough to argue for prolonged weakness when a 25 bps rate cut is already fully priced in. Add to the fact that another 25 bps cut is priced for October and another 25 bps cut is priced for March 2020, the dollar should only fall further if markets are more pessimistic about those odds.

For now, the next key risk event to influence that will be the Trump-Xi meeting next week. Even if no major compromise is expected, it'll be interesting to see if they can even get talks back on track after weeks of no communication.