Against the backdrop of perceived dovish testimony by the Fed Chair Janet Yellen, Friday's weaker CPI and retail sales reports from the US further dampened expectations of a Fed rate hike action in September and weighed heavily on the US Dollar, lifting the GBP/USD pair to its highest level since Sept. 2016.
The pair was now seen consolidating last week's strong gains to near 10-month highs and traded in a narrow trading band around the 1.3100 handle as investors now look forward to the much awaited start of the Brexit negotiations. Today's economic docket lacks any important market moving releases and hence, any news/developments surrounding the impending Brexit, and USD price dynamics would act as key determinants of the pair's movement at the start of the new week.
From a technical perspective, the pair has decisively broken through 1.3030-50 important hurdle and remains poised to extend the near-term appreciating move. With short-term technical indicators still away from near-term overbought conditions, the pair seems more likely to extend the upward trajectory towards 1.3170 resistance area marking 61.8% Fibonacci expansion of 1.2109-1.3048 up-swing and subsequent retracement. Meanwhile, any profit taking slide might now be looked upon as buying opportunity and hence, is likely to be limited near a previous strong resistance, now turned support near the 1.3050-30 region.
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