Cable buyers look to retest last week's highs on shove back above 1.3800

GBP/USD trades up by 0.4% to 1.3820 on the day

The dollar is sitting slightly lower now as risk sentiment continues to keep firmer in European morning trade, with the greenback and the yen both the laggards currently.Invest in yourself. See our forex education hub.

That has seen the pound push up to lead gains in the major currencies space, with cable rising from 1.3780 earlier to 1.3820 - pushing past its 100-hour moving average (red line). That comes as buyers somewhat defended a couple of tests of its 200-hour moving average (blue line). As such, the near-term bias is now more bullish.

The highs last week around 1.3833-34 are a notable resistance region to watch on the break above 1.3800 but the daily chart highlights a more key level to pay attention to:

That being the 200-day moving average (blue line) @ 1.3847, as buyers look to push back above the 100-day moving average (red line) @ 1.3788 currently.

As mentioned last week here, there is scope for cable to run up to test the key daily moving averages highlighted above but an extensive break towards 1.4000 is still one step too far and I stand by that conviction for the time being.

The only reason I see that moving is from a technical perspective as while the dollar may be flaky in trading over the past few days, higher yields should keep the greenback underpinned especially with the market anticipating a hawkish step by the Fed next week.

October 26, 2021 at 10:52PM

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