Cable buyers look to try and seize near-term control
The pound is posting fresh highs for the day now as BOE policymaker, Dave Ramsden, brushed aside talk of negative rates - for now at least - and affirmed that he still views the effective lower bound in the bank rate at 0.10%.
Cable pushed to a fresh high of 1.2859 from 1.2830 with buyers now looking to try and keep a break above the 200-hour MA (blue line) @ 1.2831.
Hold a break above that and the near-term bias will turn more bullish instead. Keep below and the near-term bias will remain more neutral.
Despite Ramsden's remarks, it is tough to argue that this is what sets off a significant turnaround in pound sentiment. The BOE communication on negative rates over the past few months has been all over the place and today is another evidence of that.
While Ramsden may be trying to manage market expectations a little, Tenreryo is certainly sending the opposite message as seen here earlier in the day.
Back to cable price action, while buyers may look for a push higher from this, there are still risks from Brexit negotiations to be mindful about.
Pound buyers are still holding out for some optimistic outcome but if the EU is adamant that they can stretch the deadline to 31 October, I can't see how talks this week are going to lead anywhere substantial.
There might be 'hints' of progress ahead of the European Council meeting on 14-15 October, but it may end up being more posturing before the can gets kicked down the road again for another two weeks a la Brexit tradition.
Adding to that, the virus situation in the UK will also pose some challenges for the pound to sustain the early gains seen so far today.
But for now, buyers are making a play and there is some minor resistance from the 22 September high @ 1.2858 before the next key resistance level comes in at the 61.8 retracement level of the swing move lower from 1.3000 @ 1.2880.
Beyond that, there are offers closer to 1.2900 and then around 1.3000 with the latter a key focus level in case buyers really try to chase for a sustained move higher.
