GBP/USD Price, Chart and Analysis:
- GBP/USD hits a new 8-month high on US dollar weakness.
- UK Bank Holiday on Monday may prompt profit-taking later.
Sterling Pushes Higher Ahead of the Long Weekend
The British Pound is pushing higher Friday, especially against a weak US dollar, and is now back at levels last seen in late December 2019. Fed chair Jerome Powell’s Jackson Hole speech yesterday confirmed market expectations that the central bank will let inflation overshoot if needed and will now follow average inflation targeting (AIT) for as long as needed. After a brief burst higher, the US dollar has now resumed its medium-term sell-off.
US Dollar – Dead Cat Bounce?
There is little news about ongoing EU/UK trade talks with both teams working behind the scenes and keeping quiet. The British Pound still seems to be pricing-in a deal outcome with the UK currency better bid across a range of other majors. A no-deal scenario cannot be ruled out and leaves Sterling vulnerable at its current levels. There is a long-weekend ahead with the UK closed on Monday and GBP may see a bout of profit-taking later today as dealers square up ahead of the Bank Holiday.
Bank of England governor Andrew Bailey speaks later today (14:05 UK) opening proceedings on the second day of the virtual Jackson Hole Symposium and his comments need to be closely followed. For all economic data releases and market-moving events, see the DailyFX Economic Calendar
GBP/USD trades around 1.3275 after printing an 8-month high of 1.3289 earlier today. The recent trend higher continues to hold sway with cable printing higher lows and higher highs over the last four days. The move is starting to look stretched in the short-term with CCI indicator showing the pair in heavily overbought territory. While the recent supporting trendline has been broken, but not convincingly, it continues to prop up the pair and offers support around the 1.3145 level, just ahead of the 20-dma at 1.3122.
GBP/USD Daily Price Chart (January – August 28, 2020)
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