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The Pound to Dollar exchange rate rallied to new highs for the week on Friday, overcoming some key levels along the way and bringing a longer-term recovery trend back into focus on the charts.
Widespread losses for the US dollar helped Sterling to overlook a mixed UK retail sales figures for July out earlier in the European morning, with the rally leading GBP/USD to recover key levels on the charts.
GBP/USD rose back above its 200-week moving average at 1.2845 before climbing above the 61.8% Fibonacci retracement of its July fall at 1.2901 as the greenback gave ground to all major currencies.
The dollar weakened broadly in Asia, Europe and North America time zones, helping GBP/USD to extend its prior recovery from early August’s lows, while creating scope for further gains up ahead.
“GBP gains have picked up again after spot broke out bullishly from yesterday’s consolidation range,” says Shaun Osbourne, chief FX strategist at Scotiabank.
Above: Pound to Dollar rate shown at daily intervals with selected moving averages and black trend lines denoting a narrowing symmetric triangle indicate possible areas of technical support, while Fibonacci retracements of July downtrend highlight possible technical resistances.
“Fresh short-term highs for Cable through 1.29 target additional gains towards 1.2950/1.30,” he adds.
GBP/USD has rallied strongly since Tuesday when UK employment figures came in better-than-expected and US producer prices data suggested further disinflation may be in the pipeline, boosting the Pound and weighing on the Dollar.
A downside surprise for UK inflation dealt a setback to Sterling on Wednesday even as the Dollar softened after a further decline for US inflation led markets to become more confident that US interest rates will be cut meaningfully from September.
However, data telling of a resilient second quarter for the UK economy helped GBP/USD to recover further lost ground on Thursday even as the Dollar rallied following a blowout US retail sales report for July.
Friday’s gains now bring the 78.6% retracement of the late July fall at 1.2965 into focus, the last defence of the year-to-date highs around 1.3047, ahead of public remarks from Bank of England Governor Andrew Bailey and Federal Reserve Chairman Jerome Powell at Jackson Hole Symposium next week.
Above: Pound to Dollar rate shown at daily intervals with selected moving averages and black trend lines denoting a narrowing symmetric triangle indicate possible areas of technical support, while Fibonacci retracements of July downtrend highlight possible technical resistances.
