The pound continues to struggle for momentum as buyers fail to breach the 1.30 level in trading last week
After the slide to start the month, cable got some reprieve last week on a push towards 1.3000 but the key level held and shifted the focus to key near-term levels instead.
Buyers defended the upside momentum somewhat, but are starting to give way amid the latest turnaround in the dollar on the risk-off mood today.
The pound's own woes haven't really gone away as Brexit talks continue to go nowhere and the UK's economic recovery is now under threat amid the rise in virus cases, which is prompting considerations of lockdown measures once again.
For cable, we are seeing price action now slip to a six-day low and more importantly sellers are pushing price below the key hourly moving averages @ 1.2907-36.
That sees the near-term bias shift to being more bearish now with the 17 September low @ 1.2865 also looking to be breached.
The shift in the tide here should give sellers added momentum to chase a move towards the 1.2800 handle with the 10-11 September lows @ 1.2763-74 a key spot to watch.
In the bigger picture:
The inability for buyers to break back above 1.3000 is an ominous sign and amid a potentially stronger risk-off tilt in the market and a rather bleak pound outlook, a move towards the key daily moving averages @ 1.2720-28 is certainly plausible.
The dollar side of the equation remains the real caveat. If the market focus turns back towards US stimulus and how it is still 'all talk but no action', that could also stifle the dollar despite the more defensive risk mood we are seeing right now.