GBPUSD D1 12-11
GBP/USD daily chart

The pair saw a bit of a bounce back the day after the US election result but that was arrested closer to the 1.3000 level alongside the 100-day moving average (red line) last week. Since then, sellers are back in control with price keeping lower again today and poised for a third straight day of declines.

The fall now sees GBP/USD down to its lowest levels since August and is eyeing a test of key support. The 200-day moving average (blue line) is up next at around 1.2817. Cable has not traded below both its key daily moving averages since May. A break lower here will solidify a more bearish bias in the pair with the dollar looking to extend its post-election run.

If the 200-day moving average and 1.2800 level breaks, the August lows around 1.2664-72 will be eyed next to the downside.

As things stand, it's all about the momentum play in the post-election period. The dollar continues to be favoured and even if you look at it from a central bank perspective, it is also the case.

Markets have priced in ~87% odds of a 25 bps rate cut by the Fed for December. Meanwhile, the odds show a ~75% probability of the BOE holding its bank rate unchanged. If the former is to flip to being a hold decision or the latter flipping to be a rate cut decision, either of that is also a push factor for GBP/USD to nudge lower.

So, therein lies the balance of risks of the fundamental side of things. And we'll have to weigh that up alongside the post-election dollar momentum as well as the technical considerations above. In short, the balance of risks continue to favour more downside in cable for now.