GBPUSD Technical Analysis – The Pound surges on US Dollar weakness

Fundamental
Overview

The USD continues to remain
under pressure amid positive risk sentiment and the imminent rate cuts from the
Fed which should help global growth. These are generally bearish drivers for
the greenback.

In fact, the appreciation
of the GBP has been mostly driven by the US Dollar side of the equation. The market
sees a 64% probability that the BoE keeps rates steady in September and then
delivers at least two rate cuts by the end of the year.

The focus will be on
tomorrow’s Flash PMIs and then Fed Chair Powell speech at the Jackson Hole
Symposium on Friday.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD rallied all the way to the 1.3043 level after breaking above
the key resistance zone around the 1.29 handle. This
is where we can expect the sellers to step in with a defined risk above the
level to position for a drop back into the 1.29 handle. The buyers, on the
other hand, will want to see the price breaking higher to increase the bullish
bets into the 1.3140 level next.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that if we were to see a pullback, the buyers will likely lean on the
upward trendline around the 1.2920 level where we
can also find the 50% Fibonacci
retracement level for confluence.
The sellers, on the other hand, will want to see the price breaking lower to increase
the bearish bets into new lows.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor support zone around the 1.30 handle. We can expect the
buyers to lean on it with a defined risk below it to position for new highs,
while the sellers will want to see the price breaking lower to increase the
bearish bets into the trendline. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we get the UK PMIs, the US Jobless Claims and US PMIs. On Friday we
conclude the week with Fed Chair Powell speaking at the Jackson Hole Symposium.

This article was written by Giuseppe Dellamotta at www.forexlive.com.