(MENAFN- DailyFX)
Key Talking Points:
- GBP/USD stuck just below 1.40 but bullish momentum holds
- US PCE data is widely anticipated as price pressures start to subside elsewhere
GBP /USD is trading just shy of the 1.40 mark for the first time in 5 weeks as a less hawkish Fed withdrew some support for an already weakening Dollar. The pair was already on a stronger path higher since bouncing off the 23.6% Fibonacci retracement (1.3577) on the 20th of July as the Pound staged a strong bounce higher after seeing increased bearish pressure on the back of rising Covid-19 cases leading into“freedom day”.
What seemed like a possible hawkish Federal Reserve meeting on the release of the stamen on Wednesday has the possibility to reverse the recovery trade in GBP/USD as the Dollar took on some bullish momentum but Fed chair Jerome Powell was once again the one to cool overexcitement in the market as he said that the jobs market still hadn’t shown significant progress in its recovery to start removing support from the economy, which boosted GBP/USD to continue on a strong uptrend. Focus today will be on data coming out in the US, with PCE price index data being the main focus as it is the Fed’s preferred method of measuring inflationary pressures. A stronger than expected reading has the potential to dampen the recovery in GBP/USD, which has already started to cool as investors await the data out this afternoon.
GBP/USD Daily chart
Advertisement
The V-shaped bounce we’ve seen over the last few sessions has managed to reset momentum indicators into a more positive picture, with the RSI now building up towards the 70 line. So far today there has been some resistance to bring GBP/USD higher above 1.3975 but this could be a pause for fresh air before momentum continues building higher. The key will be whether the pair is able to consolidate above 1.40 as this area has exhibited strong resistance in the past and is likely to continue attracting opposing forces.
Looking ahead at next week, the Bank of England will take center stage as all eyes are on central banks and how they deliver their views on the current state of the economy and their future projections.
Learn more about the stock market basics here or download our free trading guides .
--- Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin
MENAFN30072021000076011015ID1102542081
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.