GBP/USD retreated on Thursday after optimism over EU-UK trade talks dissipated, highlighting the precarious position of sterling bulls.
An EU official denied tweets by a Financial Times reporter on a Brexit trade talks breakthrough nL8N2GS4OH.
Sterling, which had rallied off early U.S. lows by 1.2828 to a two-week high by 1.2979 after the FT report, went into reverse.
Thursday's GBP/USD volatility highlighted near-term support and resistance levels.
While traders slug it out within the daily cloud spanning 1.3075-1.2769, cable finds resistance above the day's 1.2979 high at the 55- and 30-day moving averages just beyond 1.3000 and the daily cloud top at 1.3075.
Bulls need a rise above 1.3079, the 50% Fib of September's 1.3481-1.2676 range, to gain momentum.
For now, bears remain in control given Brexit and COVID's downward pressure on growth, inflation and possibly rates.
A dip below the cloud could bring about a return to September lows by 1.2676 and the lower 30-d Bolli by 1.2590.
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