- GBP/USD has picked up a bid and rallied from the ascending trend live down at 1.2830 and has pierced 1.29 the figure.
- Cable is benefiting from broad dollar weakness, while otherwise, there is no data due until September for the UK and focus stays with the risks of a hard exit which have been weighing on the pound.
GBP/USD is currently trading at 1.2892. GBP/USD has been in recovery since last Thursday as Asian and European traders sold the dollar leading into the Powell speech at the Jackson Hole. The traffic was all one way where Powell sees no risk of the economy overheating and implied that a flattening yield curve holds a meaningful message. The market now expects that the Fed Funds will top out at around 2.75% despite the economic momentum. Powell even expressed his belief that the 2% target will not be exceeded. The underbelly of an unsustainable federal budget deficit, adverse demographics and low productivity pose structural challenges – this throws 2019 rate hike prospects into question.
And on the Brexit front . . .
Meanwhile, on the Brexit front, the UK has been preparing for the event of a no-deal Brexit as Brexit Secretary Dominic Raab last week urged that both sides find sensible solutions so business can continue in such a scenario. so far, there has been little in the press today but PM May is noted to be travelling to Africa this week to shore up relationships for the post-Brexit world.
“French PM Macron suggested a Brexit accord by year-end might be acceptable, which stretches out the timeframe for a deal to be reached by another few weeks potentially. But that still leaves PM May with a lot of work to do against a parliamentary backdrop that remains relatively unfriendly,”
analysts at Scotiabank explained.
GBP/USD levels
The 21-D SMA that had been capping bullish attempts has been pierced and bulls now target the 50-D SMA within the bearish and widening channel on a run through the 1.29 handle. RSI still has plenty to go to the upside and the price is way below its targeted Bollinger band through the 21-D SMA due to the heightened volatility of late (wider band). However, the pair will be breaking a historic trend on a sustained break of the 21-D SMA – more likely to create fading opportunities at 1.30 /1.3050 the figure – if not, 1.3102 is the late June low. On the flipside, the bears can target below 1.2677 and aim for 1.2589 on the wide as the June 2017 low. 1.1985 is the H&S objective below there.
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