GBP/USD bulls struggle to break 1.3880 ahead of key data

GBP/USD bulls looking for resistance 1.3880s to break, traders await BoE after key data week.
GBP/USD bears lean on daily dynamic support.

Ross J Burland FXStreet

GBP/USD is trading at 1.3838 in the open today, holding in a tight range between 1.3831 and 1.3851.

GBP/USD firmed to a one-week high against the dollar on Friday and did so despite a risk-off environment that supported the greenback. Markets are counting down to the Bank of England and Federal Reserve meetings this month.

GBP/USD traders eye BoE

The BoE is expected to raise borrowing costs by end-2022 or even earlier if inflation remains high and economic recovery from the pandemic continues, a Reuters poll showed.

Governor Andrew Bailey said last week that half the bank's board members deemed conditions were right to start considering rate rises. "Those two positive developments are helping to lift cable back towards the 1.40 level," said Lee Hardman, currency analyst at MUFG Bank.

There are prospects of the first-rate hike coming in the first half of 2022, but there needs to be more improvement in the economy and so far, the third quarter has started out on the backfoot. This week’s calendar includes higher-frequency data.

Jobs figures on Tuesday will be the most key data release which leaves Consumer Price Index second behind it. A bounce higher in August inflation will be mostly due to transitory reasons that are playing a secondary role in driving BoE’s decisions compared to longer-term projections. Retail Sales will also be a focus.

GBP/USD technical analysis

The bulls will look for a test of the resistance in the 1.3880s to give while bears will look to challenge commitments towards the dynamic support line.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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