GBP/USD Forecast: Aiming at 1.33 amid Powell's speech, Hogan's departure, bullish technicals

Is Brexit becoming better? Michel Barnier, the gruntled chief EU Negotiator is still in charge, but he lost a close ally – Phil Hogan. The tall Irishman was prominent in influencing future commercial relations between Brussels and London through his post as Commissioner of Trade for the EU. 

Hogan is out – following his violation of quarantine rules in his native Ireland. The European Commission may struggle to find a replacement as formidable – and knowledgeable of the sensitive issues on the Isle of Ireland – like the outgoing official. 

Uncertainty about EU-UK relations hamstrung sterling and bulls may find some relief, allowing GBP/USD to rise amid dollar weakness. 

The main of the week is due out later on Thursday – Jerome Powell, Chairman of the Federal Reserve, will deliver a highly-anticipated speech in the virtual Jackson Hole Symposium. Powell is set to lay out a new policy framework, allowing inflation to temporarily surpass the 2% target – catching up with slow rises in consumer prices beforehand. 

While inflation is far from being a concern and rates are set to remain around zero through 2022, the long-term shift may weigh on the dollar. If investors foresee low borrowing costs for longer, yields on US Treasuries could fall, dragging the greenback along with it.

Powell's projected policy statement is not fully priced by markets and confirming the shift could trigger a fall in the dollar and a rise in cable. The devil may be in the details.

See 

• Powell Speech Cheat Sheet: Three scenarios for the dollar and stocks
• Powell’s Jackson Hole Symposium Preview: Inflation’s virtual reality

Two American economic indicators serve as a warm-up to the Fed Chair's speech. Initial jobless claims are set to decline in the week ending August 21 after rising in the previous week and causing concern. The first revision of second-quarter Gross Domestic Product is set to show a minor improvement – albeit from a record crash of 32.9% annualized. 

See:

• US Initial Jobless Claims Preview: It is the trend that matters
• US GDP: Will the corona-quarter look better at second sight? Not necessarily

Coronavirus headlines are mostly positive on both sides of the pond, with cases declining in the US and seemingly under control in Britain. Efforts to develop a vaccine are in full force and fresh headlines regarding medical developments could boost sentiment and depress the safe-haven dollar. 

Overall, the combination of Hogan's departure and a dovish Powell could boost pound/dollar. 

GBP/USD Technical Analysis

Cable continues benefiting from upside momentum on the four-hour chart and is trading above the 50, 100, and 200 Simple Moving Averages. Moreover, the Relative Strength Index remains below 70, outside overbought conditions. 

Resistance is at the recent high of 1.3265, followed by the late 2019 peak of 1.3330. The next level is December's peak of 1.3510. 

Support awaits at 1.3185, which was a swing high in early August. It is followed by 1.3150, a peak earlier this week, and 1.3130, a low point on Thursday. 1.3050 and 1.3005 are next.