GBP/USD continues to be pressured lower in trading today
The low for the day hit 1.2181 but for the most part in European trading so far, the pair has been hugging close to the 1.2200 handle as the dollar remains firm amid the softer risk mood in the market since overnight trading.
The pound itself has its own problems though. As I have been highlighting, the UK is still very much failing to impress in their handling of the coronavirus outbreak – despite easing restrictions – and the fact that we have Brexit risks at play as well in the coming weeks.
Add to the fact that recent flow momentum saw a stall at the 200-day MA (blue line) towards the end of last month before reversing, it only gave sellers more conviction to chase a move to the downside in cable over the past two weeks.
That said, we’re now approaching a key level in cable that will prove to be decisive in terms of short-term momentum in the pair.
The daily support at 1.2200 is the one to watch but also the 7 April low @ 1.2166.
Price action may be reaching one-month lows, but upon a break of the latter especially, I would say that one can expect stops to be hit and cable could easily accelerate downside momentum towards 1.2000 as the first target.
In the meantime, be wary of headline risks as well. But if risk sentiment continues to sour and keep the dollar underpinned, cable could be headed towards testing times if we get close to support at 1.2166 in the coming sessions.