GBP/USD outlook: Cable is holding near 1.3000 barrier ahead of Powell's speech
|GBP/USD
Cable keeps form tone on Monday and hit new yearly high, trading just ticks under psychological 1.30 barrier.
The pair advanced strongly in past two weeks and bulls may start to lose traction on facing headwinds from 1.30 resistance, as daily studies are overbought, and 14-d momentum indicator is turning south at very high levels in the positive territory.
Markets also await the speech from Fed Chairman Powell, later today, expecting more signals from the central bank about the monetary policy.
The latest data showed inflation returned to the path towards 2% target, adding to expectations for September rate cut, however, Chief Powell needs to confirm this in one of his last speeches ahead of July 30/31 policy meeting.
On the other hand, Powell may say that conditions are improving, but the central bank still needs more evidence to eventually give firmer signal of rate cut, which will be hawkish signal and negative for the pound.
Also, assassination attempt on former US President and presidential candidate Donald Trump, over the weekend, has sent a shockwaves through the markets and may continue to impact market performance.
While technical studies show initial reversal signals and warn of pullback, it is more likely that fundamentals (Powell’s speech today and UK inflation data on Wednesday) will again play a key role in defining cable’s near-term direction.
In bearish scenario of an upside rejection at 1.30 barrier, the price may drop towards strong supports at 1.2860/30 (June 12 former high / rising 10DMA).
Conversely, sustained break of 1.30 pivot to open way for fresh acceleration higher and expose targets at 1.3100/41 (round-figure / 14 July 2023 peak).
Res: 1.3000; 1.3049; 1.3100; 1.3141.
Sup: 1.2961; 1.2902; 1.2860; 1.2830.
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