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Cable is on the move thanks to shifting broad risk sentiment and not-so-optimistic headlines on Brexit and the U.K. economy, setting up GBP/USD traders with a very simple technical opportunity.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/AUD ahead of U.K. unemployment data, so be sure to check that out to see if there is still a potential play!

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Fresh Market Headlines & Economic Data:

U.S. Stocks slip as traders eye stimulus talks, earnings

Small Business Optimism Improves in September, Uncertainty Index Remains High

Pelosi says Trump offer on coronavirus bill falls short, still hopes for deal

Used vehicles lift U.S. consumer prices, but inflation slowing

OPEC cuts 2021 oil demand forecast again as virus cases rise

Bank of England’s Bailey sees no V-shaped recovery

IMF revises its global GDP forecast higher, but warns the economy ‘remains prone to setbacks’

UK unemployment rate jumps to 4.5%, highest in three years

German ZEW investor sentiment falls on virus, Brexit angst

EU’s Barnier says not enough progress in Brexit talks

German Inflation rate of -0.2% m/m in September 2020

Kuroda says BOJ has no immediate plan to issue digital currency

Upcoming Potential Catalysts on the Economic Calendar

Australia Consumer Confidence at 11:30 pm GMT
Australia New Home Sales at 12:00 am GMT (Oct. 14)
Japan Industrial Production, Capacity Utilization at 4:30 am GMT (Oct. 14)

What to Watch: GBP/USD

GBP/USD 1-Hour Forex Chart
GBP/USD 1-Hour Forex Chart

On the one-hour chart above of GBP/USD, we can see the pair pulled back on today’s session, likely on a move lower on negative broad risk sentiment (negative COVID-19 vaccine newsglobal economic outlook concerns from the IMF?) and possibly on today’s disappointing headlines from the U.K. (unemployment rate jumps to 4.5%, EU’s Barnier says not enough progress in Brexit talks).

After today’s drop, the pair is now testing the bottom of a rising channel, and Stochastic is showing potentially short-term oversold conditions…is it time for the bulls to jump in?

Well, with no major catalysts scheduled ahead, and with risk sentiment likely to stay negative for now, the odds are still with the bears on this pair. So, the price action signal to likely watch out for is a break below the rising ‘lows’ pattern for a potential short position.

Or, for the more conservative traders, a bounce from current levels to the middle of the channel could draw in sellers, at which point we should be looking out for bearish reversal patterns if the risk environment remains risk-off.

For the bulls on Cable, the recent price action is on your side for a swing position if you expect the risk environment to flip back to risk-on (a likely scenario with positive COVID-19 developments and/or positive U.S. stimulus developments) or for a Brexit deal breakthrough to come soon, buying at these levels makes sense to play the trend higher.

Or it may make sense to wait for the trend higher to resume as a confirmation of a short-term bottom before considering a long position.