The pound is doing that thing where it is following the action in commodity currencies again today, with it being one of the worst performing major currencies alongside the antipodeans. GBP/USD is now down 0.5% to 1.2380, sitting near the lows for the day.

The pair had already come under pressure from the softer UK retail sales data earlier and that is perhaps doing a number on the pound today as well. And with the dollar seen firmer across the board (except against the yen), that is seeing cable under a bit of pressure in European trading.

That said, in the big picture, the pair is still very much caught in a bit of a bind between support closer to 1.2345 and the 1.2500 mark for the time being:

And if you zoom out to the weekly chart, one can argue that the pair is essentially caught in between key support (6 January low) near 1.1840 and key resistance (14 December high) around 1.2446 for now.

That pretty much outlines a sort of confined trading range for cable in the grand scheme of things, until we get a firm break on one side or the other.

It doesn’t really help that the BOE is still being forced to hike that little bit more while markets are at the same time expecting the Fed to relent and head to the sidelines after May.

That is putting both dollar and pound sentiment sort of in the same basket when it comes to central bank outlook. The lack of policy divergence isn’t really helping to give a clear shot for traders as they take aim at GBP/USD.

This article was written by Justin Low at www.forexlive.com.