“¢ USD hammered down across the board after Powell’s perceived dovish comments.
“¢ The pair remains on track to end the week with gains of over 150-pips.
The GBP/USD pair built on its intraday positive momentum and recovered a major part of losses recorded in the previous session.
The already weaker US Dollar was further knocked down across the board in knee-jerk reaction to the Fed Chair Jerome Powell’s speech at the closely watched Jackson Hole symposium.
Powell reaffirmed that gradual hikes remain appropriate monetary policy stance, though added conditionality by saying “if the strong growth in income and jobs continues”. Powell also sounded a bit dovish on the inflation outlook and said that there were no clear signs of inflation accelerating above target.
He further added that there were good reasons to expect strong economic growth to continue but there was no sign of an overheating of the economy, which prompted some aggressive USD selling in the past hour or so.
The pair rallied to session high level of 1.2881, up over 80-pips from the key 1.2800 handle touched during the early Asian session, albeit quickly retreated around 25-pips to currently trade just above mid-1.2800s. Nevertheless, the pair remains on track to end the week on a positive note, gaining over 150-pips for the week.
Technical levels to watch
Any subsequent up-move is likely to confront resistance near the 1.2900-1.2910 region, above which the pair is likely to aim towards challenging its next major hurdle near the 1.2960-70 region.
On the flip side, the 1.2855-50 region now seems to protect the immediate downside, which if broken might turn the pair vulnerable to head back towards challenging the 1.2800 support area.
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