- GBP/USD gained some strong positive traction on Friday amid a broad-based USD selloff.
- The GBP bulls largely shrugged off Brexit concerns, BoE Governor Bailey’s dovish comments.
- A sustained move back above the 1.3300 mark needed to confirm any further appreciation.
The GBP/USD pair shot to fresh YTD tops, around the 1.3320 region during the early North American session, albeit quickly retreated few pips thereafter.
Following the previous day's volatile swings and a brief consolidation through the early part of the trading action on Friday, the pair caught some fresh bids and finally broke out of a near two-week-old trading range. The US dollar remained under some heavy selling pressure in the wake of dovish Fed signals, which, in turn, was seen as one of the key factors driving the GBP/USD pair higher.
The Fed Chair Jerome Powell, during his keynote speech at the Jackson Hole Symposium, said on Thursday that the Fed is willing to tolerate inflation overshooting the 2% target for some time in order to compensate years of undershooting. The comments raised speculations that the Fed will increase its monetary stimulus and keep rates lower to support the economic recovery from the pandemic.
Apart from a broad-based USD weakness, possibilities of some short-term trading stops being triggered on a sustained move back above the 1.3240-50 region further contributed to the GBP/USD pair strong positive move. The GBP bulls seemed rather unaffected by concerns over the lack of progress in Brexit talks and also shrugged off the BoE Governor Andrew Bailey's dovish comments in the last hour.
Bailey said the UK central bank has more ammunition to support the economy from its coronavirus shock. Bailey also supported the possibility of negative interest rates, albeit failed to impress bearish traders or prompt any meaningful selling around the GBP/USD pair. Nevertheless, bulls might now wait for a sustained move back above the 1.3300 round-figure mark before placing fresh bets.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.