Cable keeps at three-week highs around 1.2400 amid weaker dollar

Technical Analysis

GBP/USD continues to look perky to start the week

GBP/USD D1 01-06
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The pair touched a high of 1.2426 earlier in the session, testing the 61.8 retracement level of its recent downswing last month, before retreating a little amid the China trade report.

The dollar pared some losses on that in a move from 1.2420 to 1.2390 but cable is now keeping just above 1.2400 again mid-way through European morning trade.

As things stand, the dollar side of the equation continues to be the dominant factor and the greenback is off to a softer start as it continues its poor form since trading last week.

For cable, the minor resistance around 1.2426 is helping to limit gains for now before the 8 May high @ 1.2467 comes into play. More critically, the 1.2500 handle will be a key spot to watch over the next few sessions as the pound side of the equation will offer more interest.

Besides that, the UK government is looking to ease lockdown restrictions further and gradually allowing the reopening of schools, but their handling of the coronavirus crisis has been far from impressive to say the least.

As such, a renewed spike of infections may be a cause of concern in the coming weeks and would derail much of the UK economic outlook in the coming months.

Although the dollar is in a rough spot, a move back towards 1.2500 or a climb back above the key daily moving averages @ 1.2577 and 1.2670 may be a step too far for cable for now amid the risks involved for the pound above – especially on Brexit.

Those levels may offer some attractiveness for sellers, all things being equal.

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