The pound is the best performing major currency at the moment
Rising yields across the globe seem to be helping with pushing the euro and pound higher on the day despite Treasury yields being the catalyst for that. I’m really not seeing anything else in the move higher in the euro and pound apart from that as equities continue to display hints of a risk off tone.
The rebound in the pound sees it recover to the 50.0 retracement level of the overnight drop @ 1.2973. But much like EUR/USD, as long as price holds below the key hourly moving averages the near-term bias remains more bearish for GBP/USD.
Right now, the level to eye for is the 1.3000 handle and the 100-hour MA (red line) @ 1.3007. That’s the key level that buyers will be keen to do battle with and a key level that sellers will be eager to defend. As long as price remains below that, then the near-term bias continues to side with sellers.
The Brexit rhetoric is calming down for the time being as UK domestic politics heat up. The latest news is that Theresa May wants to push forward with the Chequers vote in parliament as soon as possible before she faces a tougher task to gather enough votes to proceed with her plans. Her win may spell some upside for the pound but do be reminded that the EU has stated that they won’t go forward with Chequers unless there are some credible amendments — particularly to that of the Irish border solution.
The outlook is still a tricky one and that will continue to weigh on the pound as long as negotiations continue to stall. I would expect any rebound in the pound to be limited in that regard.
As for downside levels, cable sellers must now look back to close below the 19 July low @ 1.2958 once again to exert further conviction for a move lower — much like yesterday.