GBP/USD is soft on the day, -0.14% at 1.2735 in early NorAm, but is holding above its daily cloud (1.2726-1.2653), which gives bulls hope.
This after repeated tests of 100-DMA support in the mid-1.2680's, and though the 200-DMA to 10-DMA range has held, bulls are poised to test recent highs after a series of failures on the downside.

The sterling slide to 5-week lows at 1.2666 on Thursday, just above 200-DMA support at 1.2663, came amid a perfect storm for bears.

First, the sterling long position had grown, by July 23, to a record high above 142k contracts 1096742NNET.
This overbought condition left the pound potentially vulnerable.

Secondly, the BoE began cutting rates at its August 1 meeting and though they remain cautious and data dependent with regard to inflation, the cut in and of itself is overtly dovish.

Third, after the soft payrolls data on August 2, the ferocious exit from risk on heightened recession fears, exacerbated what might have been a natural backing and filling for GBP/USD on supply issues.

Sterling bulls received a reprieve with the release of better-than-forecast services PMI on Monday, and softer than forecast claims data Thursday, which hinted the slowdown in the U.S. was not as extreme as thought after last Friday's payrolls miss.

With risks to the downside muted, sterling is likely to remain in its current range awaiting UK payroll data and U.S. PPI on Tuesday and U.S. CPI Wednesday for clues to the depth and speed of upcoming c.bank cuts.
Also on the radar will be the Aug 22-24 Click here Symposium.

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