Cable a little lower on the day but caught between key near-term levels for now

Technical Analysis

GBP/USD price action is trapped between the key hourly moving averages

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The pair was weaker in European trading yesterday but held on to support from around the 1.2250-60 region before rebounding higher amid month-end and quarter-end flows which saw the dollar weaken across the board.

That said, the gains in the pair were limited by resistance from the 200-hour MA (blue line) as well as the 50.0 retracement level @ 1.2397.

Since then, price action has been more tepid and amid a slight bid in the dollar today, we are seeing sellers push back towards the 100-hour MA (red line) @ 1.2360.

That is the level that is helping to keep support in the pair for now as price action remains trapped between the key hourly moving averages at 1.2360 and 1.2401.

The market is adopting a more cautious tone for now, with US futures seen on the defensive and European equities look set to follow that at the open later.

I would argue that there is a slight bias to keep fading the flows yesterday, in which the “better” risk mood from US trading could also be related to window dressing, and that is likely to keep cable rooted to the downside for now.

Let’s not forget that the coronavirus situation in the US isn’t likely to improve any time soon as underlying conditions are still largely the same for the most part.

However, despite such fundamental point of views, the technical story will be important to watch and for cable, that would be where price action breaks out on either side of the key hourly moving averages above.

That will provide stronger conviction for a more trending move in the coming sessions.

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