Bullish view
Bearish view
The GBP/USD exchange rate held steady, reaching its highest level since May 12 this year as the US dollar weakness continued after the recent US inflation report. It jumped to 1.3535, up by 3% from its lowest level since June 24.
Sterling Gains Ahead of Andy Burnham Premiership
The GBP/USD pair jumped as investors waited for the upcoming transition in the United Kingdom, where Andy Burnham is expected to become the next prime minister next week.
He is widely expected to name Shabana Mahmood as the next Chancellor of the Exchequer. Some analysts were afraid that he would appoint Ed Miliband to the role, something that would have caused volatility in the market.
The pair also held steady even as the UK published a mixed GDP report. In a statement today, the Office of National Statistics (ONS) said that the economy expanded by 1.3% in May, missing the expected 1.4%.
Other metrics came short of expectations. Industrial production dropped by 0.5%, while construction output fell by 0.8%. On the positive side, the country’s manufacturing production rose by 0.1% during the month. Market participants are mixed on what the Bank of England will do, with some expecting it to hike rates later this year as energy prices jump.
The GBP/USD pair is also soaring as investors react to the latest US inflation report. A report on Tuesday showed that the headline consumer and producer inflation were lower than what analysts were expecting. As a result, these numbers have reduced the urgency for the Federal Reserve will need to hike interest rates this month.
The pair will next react to some key macro numbers from the United States. The Commerce Department will release the latest retail sales numbers, which will provide more information about the state of the American consumer. Also, the US will publish the latest pending home sales data.
GBP/USD Technical Analysis
The daily chart shows that the GBP/USD pair has been in a strong bullish trend in the past few days, moving from a low of 1.3150 to a high of 1.3535. It has jumped above the 50-day and 100-day Exponential Moving Averages (EMA), while the two lines of the Percentage Price Oscillator (PPO) have crossed the zero line. Therefore, the pair will likely continue rising in the coming days. If this happens, the next key target to watch will be at 1.3660, its highest level on May 1.
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Crispus Nyaga is a Technical Analyst at DailyForex with more than eight years of experience as a financial analyst, coach, and trader. He specializes in technical analysis of major currency pairs and cryptocurrencies, using chart patterns, trend structure, and key indicators to frame trading scenarios for Forex and digital asset markets. Crispus has worked with well-known brokers including ATFX, easyMarkets, and OctaFX, and his market commentary has been published widely on platforms such as Seeking Alpha, InvestingCube, Capital.com, and Invezz.
As seen on: SeekingAlpha, Macrostreet.com, Invezz.com, Forbes, Investing.com, Marketwatch, Crypto.news
