GBP/USD continues its slow drift lower, dipping below 1.2900 to this week's low at 1.2888, before bouncing on cloud base support by 1.2886 nL2N28009K, but this and other pullbacks should be limited.
Traders are reducing recent GBP/USD longs that were established on rising perceptions that the Tories would win the upcoming elections as option interest by 1.3000 mounts and focus shifts to global and UK economic prospects and growing expectations of UK rate cutsBOEWATCH.
The current GBP/USD pullback is understandable as the rally off October lows, by 1.2200 -- hit when UK political uncertainty and no-deal Brexit fears were rampant -- was due for a correction.
With reduced uncertainty about UK elections and Brexit, any pullbacks should be shallow, with near-term support at the 10-DMA by 1.2872 and the 30-DMA at 1.2849. More significant support comes at the 200-DMA by 1.2703 and the 50% Fib of Oct. 8's 1.2196 low and Oct. 21's 1.3012 high at 1.2604.
Above 1.2604, bulls remain in control but need to retake the ground above the weekly cloud top at 1.2941 and rise above the recent trend high at 1.3012, which for now is protected by significant option interest near 1.3000.
Above 1.3012 the 200-WMA at 1.3117 and the 50% Fib of the 1.4377-1.1959 April 2018-September 2019 dip will be targeted.
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