Technical Analysis

GBP/USD: Sellers in near-term control as Brexit rhetoric subsides for now

GBP/USD is testing support at the 1.3100 handle

ForexLive

The pound is slipping a little on the day but it’s nothing too concerning so far. For cable, the daily range sits at 30 pips still but we’re on the lower end of that with price testing a move to go below 1.3100 currently.

Sellers stay in near-term control after defending the 100-hour MA (red line) in overnight trading before price fell back below the 200-hour MA (blue line) as well. Brexit headlines are taking a bit of a breather for the moment but it’s always the most dangerous when it is silent. So, just be wary and vigilant on that.

In the meantime, with Brexit rhetoric not influencing price action all too much, the next key risk event ahead for cable will be the FOMC meeting tomorrow. Markets appear to be slowly moving along and traders will be taking this chance to start positioning themselves ahead of the Fed’s decision tomorrow.

So far, there’s not much of a hint of any bids/offers in the dollar ahead of the meeting but you have to consider that the market has already basically fully priced in a rate hike to come tomorrow. If the Fed isn’t able to offer further clues of a December rate hike, I reckon we’ll see the typical “buy the rumour, sell the fact” play against the greenback tomorrow.

But for cable today, currently support sits at 1.3100 with further support seen in the swing region between 1.3050-60. If the latter gives way, then we’ll be more prone to a correctional price action in the pair.

Meanwhile, upside is capped by the two key hourly moving averages at 1.3135 and 1.3156. That should help limit the range for cable ahead of the FOMC meeting tomorrow barring any Brexit headline surprises.

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