Dollar downside momentum picked up during Tuesday’s session, taking GBP/USD to a fresh 2024 high at 1.3054, though despite this latest push higher, cable is at risk of posting a false break of the prior YTD high (1.3044).

Confirmation of this with a daily close below 1.3044 would suggest a possible topside exhaustion, leaving the pair vulnerable to a reversal.
An even more bearish signal would be a daily close below 1.30.

False breaks are often a good reversal indicator, which in this instance would set up a bull trap.
Given that cable has struggled to maintain a foothold above 1.30 over the last 2-years and with the dollar in oversold territory, this would warn against chasing cable higher.

Meanwhile, with risk assets beginning to pull back as the S&P 500 slips back below 5600, this may add a barrier to further upside in GBP/USD.
That said, it would take a closing break above 1.3044-54 to negate the downside signal stemming from the bull trap that appears to be in place.

Looking ahead, the broader risk environment should continue to drive the action in the lead up to the Jackson Hole symposium.
Though, as has been previously flagged, risks lean toward Fed Chair Jerome Powell disappointing heightened dovish expectations, which would likely catalyze a recovery in the dollar.

For more click on FXBUZ