Key Points:
This is a follow up article to: GBPUSD slides toward double bottom as BoE rate cut hits
The British pound (Symbol: GBPUSD) surged to its highest level of 2024, reaching $1.3055 against the US dollar.
Picture: GBPUSD advanced to a new high for the year, as observed on the VT Markets app.
Looking at the charts, the GBP/USD pair has been on a bullish run, with the price reaching 1.31116, marking its fourth consecutive day of gains. This upward momentum has been supported by a combination of robust UK economic data and a weaker US dollar.
The UK’s stronger-than-expected economic performance has fueled optimism about the country’s growth prospects, while the dollar has softened on expectations of a potential shift in Federal Reserve policy.
The chart shows a consistent uptrend, with the price trading well above key Exponential Moving Averages (EMAs), particularly the 72-period EMA, which is supporting the bullish momentum. The MACD indicator reinforces this positive sentiment, with the MACD line significantly above the signal line and the histogram showing solid bullish momentum.
As the pair continues to climb, traders should watch the 1.31289 resistance level, which could act as a key barrier. If the price breaks above this level, it could signal further upside potential.
The Bank of England (BoE) has signalled that it might keep interest rates steady at its September meeting. This cautious approach is intended to stabilise the UK economy, which has shown signs of slowing growth.
The British GDP expanded by 0.6% in the second quarter, a slight increase that nonetheless reflects a pullback in economic momentum. The prospect of steady interest rates has provided a supportive environment for the pound, as traders anticipate that the BoE will avoid overly aggressive monetary tightening.
Related article: Interest rate tug-of-war for central banks
On the other side of the Atlantic, the US dollar has been under pressure ahead of the Jackson Hole symposium. This annual gathering of central bankers and financial leaders is closely watched for policy signals.
Federal Reserve Chair Jerome Powell is set to speak at the event, and traders are keenly awaiting his remarks for clues on the Fed’s next moves. The possibility of a rate cut has led to a reduction in dollar demand, further supporting the pound’s rise.
The rise of GBPUSD to a high in 2024 suggests strong bullish momentum, but the upcoming Jackson Hole event could introduce volatility.
Traders should closely monitor Powell’s remarks, as any hints toward a larger-than-expected rate cut could further weaken the dollar and push GBPUSD higher. However, if the Fed signals a more hawkish stance, the rally could face a swift reversal.
