Currently, GBP/USD is trading at 1.3101, up 0.03% on the day, having posted a daily high at 1.3117 and low at 1.3090.
GBP/USD has taken the lime light among the majors having crossed a key technical barrier and surpassing the psychological 1.30 handle. The pound has now found a strong footing in territory where the pound had traded before the Tory party conference and talk of hard Brexit for the first time in early September 2016.
"After testing $1.28 at midweek on the back of Deputy Governor Broadbent aligning more with Governor Carney who is reluctant to raise rates now than the dissenting hawks, sterling finished the week at new highs for the year," explained analysts at Brown Brothers Harriman.
At the same time, the greenback has dropped heavily on the back of Yellen's dovish testimony and the poor series of closing data from the US last week, as explained by analysts at ANZ:
"The US annual CPI inflation fell to 1.6% in June, missing expectations (mkt: 1.7%; last: 1.9%)."
"Core prices rose 0.1% m/m, with annual growth stable at 1.7%.
Retail sales also missed estimates, falling 0.2% m/m, with core sales dropping 0.1%.
Making it a three-peat of disappointments, provisional Michigan consumer confidence fell to 93.1 from 95.1 in July, led by future expectations."
"The only bright-spot was a better- than-expected lift in industrial production in June (0.4% m/m)."
Fed has to be cautious about recent softness in inflation - ANZ
GBP/USD levels
GBP/USD surpassed the 38.2% retracement of the losses suffered since the $1.50 level was seen last year on the day of the referendum, noted the analysts at Brown Brothers Harriman, adding, "The 50% retracement is $1.3430. Sterling recorded an outside up week. We see initial potential toward $1.3250 next week."
Valeria Bednarik, chief analyst at FXStreet, explained that the daily chart shows that the Momentum remains above its 100 level with limited upward strength, but also that the RSI indicator heads sharply higher at 67 as the 20 SMA advanced below the current level, in line with additional gains for this Monday. "In the 4 hours chart, technical indicators have eased partially, but remain within extreme overbought levels, while the price stands far above its moving averages. 1.3047, the previous yearly high is the immediate support, and as long as it holds, the risk will remain towards the upside."
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