(MENAFN- Daily Forex)
The British pound has now reached high levels against the US dollar and will need to see a weak US inflation print on Thursday if it is to make further progress. According to Forex trading platforms, GBP/USD rose 1.35% last week, fueled by renewed expectations of a federal Reserve rate cut in September. US economic data, including Friday's jobs report, points to a slowing Economy that may soon need the helping hand of lower interest rates. The pound-dollar jumped towards the 1.2840 resistance level at the time of writing.
Also, the clear outcome of the UK general election, which heralds a period of relative political certainty in Britain. Commenting on the performance of the currency pair and the influencing factors, Kathleen Brooks, research director at XTB, said: "GBP/USD rose 1.29% last week, suggesting that the pound may be on the verge of a bigger recovery as it has momentum, now that the political risk premium in the UK has been eliminated. The next key level is the psychological resistance of $1.30. Interestingly, sterling is rising alongside expectations of a Bank of England rate cut next month, and there is currently a 66% chance of a rate cut according to the OIS market."
For his part, Derek Halpenny, head of FX research at MUFG Bank Ltd, said, "We have raised our sterling forecasts partly because of the improved political stability going forward and partly because of signs of a stronger recovery in economic growth than we had previously expected."
Top Forex Brokers
1 Get Started 74% of retail CFD accounts lose money
Technical forecasts for the GBP/USD pair today:
Technically, GBP/USD is trading above its major moving averages, and the RSI is positive and pointing up. Also, the RSI has not yet reached overbought conditions. Noteworthy, the daily chart does have one warning sign, a resistance area above 1.28. furthermore, looking at the 2024 chart shows that the exchange rate has not been able to hold anything above 1.28 for any sustained period.
Based on the performance on the daily chart attached, the major resistance at 1.2860 is unlikely to be threatened. Note that there is another resistance level at 1.2840. Moreover, the support is at 1.2785, and a break above 1.2770 would mean that the pound is not advancing further. The presence of this resistance could see GBP/USD trading in a tight range on either side of 1.28 ahead of Thursday's important US inflation reading.
According to the economic calenda, the US headline CPI is expected to fall to 3.1% year-on-year, down from 3.3% in May, a level last seen in January. Consequently, such a result would suggest that the inflation slowdown is underway again, after being disrupted by the acceleration in prices in the first half. Furthermore, this would increase the chances of the Federal Reserve cutting US interest rates in September, and this would likely weigh on the dollar.
Meanwhile, there are no major releases from the UK, apart from the GDP update on Thursday, which is unlikely to have a major impact on the market before the important inflation and labor market data is released next week.
Ready to begin trading the Pound to US Dollar? Get our highly recommended Forex brokers in the UK here.
MENAFN09072024000131011023ID1108423804
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.