- Summary:
- GBPUSD strengthened above the 1.3000 mark on Tuesday and went on to hit one-month highs on dovish sentiment around the Fed chairman's speech.
The British pound piled up its gains against the US dollar on Tuesday, with the GBPUSD pair climbing up by 0.1 percent to go for 1.3012 in the European trading session. That puts the pound on course to record the fourth successive win against the dollar on the daily chart, as the greenback cracks under pressure fueled by the focus on Fed Chairman Jerome Powell’s speck at Jackson Hole on Friday.
The known unknowns in the Fed Chairman’s speech
Powell’s speech is expected to focus on the extent to which the Federal Reserve will slash interest rates starting September, as opposed to previous times when the market looked for hints on whether an interest rate cut was on the cards to begin with. The dovish sentiment around his speech has injected immense pressure on the dollar, with some analysts predicting as many as 3 rate cuts for the remainder of the year. The pound touched a one-month high of 1.3018 during Tuesday’s session, while the DXY index reached a year-to-date low of 101.73.
Momentum indicators
The momentum indicators on GBPUSD signal control by the buyers. The pair is well above the middle Bollinger Band and is inching closer to the upper band. Notably, this is above the psychological support mark at 1.3000. In addition, the RSI is at 75, underlining the strong bullish momentum.
Support and resistance levels
The GBPUSD pair will likely continue going upwards if it stays above the 1.3013 pivot mark. That could see the establishment of the first resistance at 1.3030. Furthermore, the buyers could build a stronger momentum to break past that level if they extend their control. That could move the upper target to the second resistance point at 1.3050. On the other hand, moving below 1.3013 will signal a shift in the momentum to the downside. With the sellers in control, the first support will likely be at 1.3000. However, further control could enable them to break below that mark, invalidating the upside narrative and potentially test 1.2985.
