The GBP/USD pair remains strong in the European session on Friday, holding comfortably above the key level of 1.3100. The USD struggles to maintain its position as the risk mood in the market improves. All eyes are now on Fed Chairman Powell’s upcoming speech at the Jackson Hole Symposium, which could bring increased volatility to the markets.
Despite a recent show of strength in the US Dollar, GBP/USD managed to close the day flat on Thursday and continued to rise early Friday, reaching its highest level in over a year above 1.3130. The positive sentiment towards the Pound Sterling was supported by strong UK PMI data, indicating a robust expansion in business activity for August.
US stock index futures are also showing gains early Friday, reflecting an overall improvement in market sentiment. This makes it challenging for the USD Index to sustain its rebound from Thursday’s negative shift in risk mood.
As investors await Powell’s speech, market expectations are leaning towards a 25 basis points rate cut in September, with a slight chance of a 50 basis points reduction. Depending on Powell’s comments regarding the policy outlook, the USD’s valuation could be impacted, leading to potential movements in GBP/USD before the weekend.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart indicates overbought conditions for GBP/USD in the near term. Resistance levels for the pair are seen at 1.3160 and 1.3200, while support levels are at 1.3100, 1.3070, and 1.3030.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world and the official currency of the United Kingdom. It is heavily influenced by monetary policy decisions from the Bank of England and economic indicators such as GDP, PMIs, and trade balance. Strong economic data and positive monetary policy decisions typically lead to a stronger Pound, while weak data and policy decisions can weaken the currency.