GBP/USD slipped to a low of 1.2663 moments ago
And price is now settling around 1.2670-75, caught in between both key hourly moving averages. It's very much back to the drawing board for buyers after a good run since the FOMC meeting last week. But as the dollar now holds more firm, cable is among those losing its upside momentum rather quickly as price is sitting closer to the 200-hour MA (blue line) than it is to the 100-hour MA (red line).
That suggests that sellers are closer to seeking a more near-term bearish bias than buyers are in establishing a more near-term bullish bias. That said, as long as price sits in between both key hourly moving averages, it's too soon to argue one way or another in my view.
Right now, the dollar is maintaining its decent form since Bullard's remarks overnight but markets aren't buying entirely into the 'no 50 bps rate cut in July' rhetoric just yet. Fed fund futures still show that traders are seeing a ~21% probability of that happening and a lot will depend on the outcome of the Trump-Xi meeting later this week.
As such, we could be caught in a bit of a lull for now in cable as traders search for a near-term directional break one way or another. The key risk event later today will be the release of US data and unless that surprises markets in some way, traders will have to wait on US-China trade talks for more clues on how to go about with the dollar direction in general.
As for the pound side of the equation, it's still all about the Tory leadership race and I reckon we'll only see more focus on that and Brexit in the coming weeks as we move closer to a result on 23 July.
