GBP/USD in a good spot to start the new week but pound risks are aplenty

Technical Analysis

Author: Justin Low | gbpusd

Cable holds at one-month highs above 1.3000 to start the week

GBP/USD D1 12-08
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Buyers are sitting well in control so far today, keeping a break above 1.3000 after the push higher from the end of last week. The Friday move higher also saw buyers break above the 38.2 retracement level @ 1.2984 upon the close.

That solidifies more upside momentum in the pair with the 50.0 retracement level @ 1.3079 offering some minor resistance for the time being.

Despite the more positive momentum, the nudge to the upside largely comes on the back of dollar weakness with EUR/USD and AUD/USD also breaking above 1.1800 and 0.7200 respectively towards the end of last week.

Meanwhile, the pound side of the equation still has plenty of question marks surrounding it as we get into trading this week. Brexit is the key factor to be mindful about for the pound this week as we get to the crucial EU summit on 15-16 October.

Then, there is also the virus situation in the UK that will see Boris Johnson unveil new national measures to address the worsening developments recently.

On the latter, that so far hasn't quite translated much into the BOE taking immediate action to pursue more easing measures so the pound has hardly reacted.

But Brexit risks are a different story and be wary of headline risks over the next few days.

As good as the technical picture may be for cable right now, any setback on the Brexit front could easily send cable back under 1.3000 and focus back towards the near-term charts instead; vice versa of course.

For now, any positive breakthroughs in EU-UK talks will help feed more fuel to pound buyers on a break above 1.3000 with further key resistance only seen closer towards 1.3200.

On the flip side, a push back under 1.3000 will see the key hourly moving averages get called back into question and that rests closer to 1.2935-48 for now.

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