The GBP/USD pair has shown significant movement today, starting at highs around 1.3260 early in the Asian session before dropping slightly to around 1.3217 before hovering at 1.3240. This reflects current market dynamics and economic indicators.
The British Pound (GBP) has continued its strong rise against the US Dollar, reaching its highest level since March 2022. The currency pair has risen for three consecutive weeks, marking a brilliant recovery since hitting its 2022 lows.
Key Factors Affecting GBP/USD
Differences in Central Bank Policy
Federal Reserve (Fed): The latest statement from Jerome Powell at the Jackson Hole Symposium indicates a possible change in policy, namely the suggestion that the Fed will start cutting interest rates in September.
Bank of England (BoE): Andrew Bailey, the BOE governor, took a more cautious tone and hinted at a slower pace of rate cuts even as the economy recovers.
Economic Indicators
UK Economic Data: Positive economic data from the UK, including manufacturing and services PMI figures that remained above 50 in August, and GDP growth of 0.6% in the second quarter, have supported the pound's strength.
US Economic Data: Strong consumer confidence data from the US, with the Conference Board reporting an increase from 101.9 in July to 103.3 in August, has also weighed on the pair.
Technical Analysis
Resistance Level: The GBP/USD pair has broken through the 1.3220 resistance level and is now targeting the 1.3300 price level. The next target is 1.3360, if there is enough external support.
Support Level: The pair is trying to test the support level around 1.3200. If this price is successfully broken through, the support price of 1.3165 will be the target. This support test ('support') was successful, the next target is the 1.3145 level.
Trading Strategy
'Bullish' view: Traders can consider buying the GBP/USD pair with a 'take profit' target at 1.3350 and a 'stop loss' around 1.3140.
'Bearish' view: Alternatively, the best selling price may be around 1.3235 with a price target at 1.3140 and a 'stop loss' around 1.3350.
Current market sentiment remains optimistic for the GBP/USD pair to continue to strengthen. However, traders should be careful by applying financial discipline and control as well as good risk.
