The GBPUSD is moving back above its 100 hour moving average as I type.
That moving average comes in at 1.25171. The price in the London morning session fell below the moving average and skipped down to a low price of 1.2480. That was above the low from yesterday at 1.24707. The low for the week occurred in the 1st hour of trading on Monday at 1.24656. So there are higher lows from Monday to Tuesday to Wednesday (at least so far). A move below the 1.2465 to 1.2473 will be needed to give sellers more downside confidence.
Recall from yesterday, the price moved sharply lower after PMI data in the UK came in weaker than expected. Also, there was a report that the energy cap would rise to £2800 in October. That is up about £800 from the last increase. The low price however found buyers near its 100 hour moving average despite a couple dips below the moving average level. Momentum could not be sustained.
Today with the moving average higher, the hurdle was easier and there was a increased momentum when there was a break below the MA level. However, with the higher low, and the modest dollar selling in US trading, the price of the GBPUSD has moved back higher.
On the topside, a move above 1.2524 (swing high from last week) would have traders looking toward the high from today at 1.2559. Above that and traders will look toward the highs from Monday and Tuesday near 1.2600.
On the downside, a move back below the 1.2500 level would have traders looking toward the Monday and Tuesday lows between 1.24656 and 1.24730. Move below that level and focus may have traders looking toward the rising 200 hour moving average at 1.2430 currently.
PS. The GBPUSD price may also be rising in sympathy with the EURUSD which came down to test its 100 hour moving average only to find dip buyers against that key moving average level (another swing levels – see post here). The EURUSD is currently trading back up to 1.0667 after testing its 100 hour moving average near 1.0637. Also US rates have moved lower and stocks have moved higher which is giving a modest tilt to the downside in the US dollar (risk off).