GBP/USD closed the last two 4-hour candles below 20- and 50-period Simple Moving Averages (SMA), while the Relative Strength Index (RSI) indicator retreated below 50, reflecting the lack of buyer interest.
On the downside, 1.2615 (the low from August 15) and 1.2650 (a static level that represents psychological support) line up as immediate resistance.
— JaeFX (@JaeFx83791) August 22, 2023
If GBP/USD manages to rise above the 1.2750-1.2760 resistance area, where the 100-period SMA and the Fibonacci 23.6% retracement of the latest downtrend are located, it could gather bullish momentum and target 1.2800 (psychological level, static level) and 1.2830 (200-period SMA, Fibonacci 38.2% retracement).
GBP/USD registered small gains last week as Pound Sterling managed to hold resilient against its rivals on hawkish Bank of England (BoE). The pair, however, stays on the back foot to start the new week as investors refrain from taking large positions ahead of key data releases and events.
BBC News – Former Bank of England boss to head Bloomberg boardhttps://t.co/NdvKEnO4zv
— Shakir Khaja (@KhajaShakir) August 22, 2023
Markets began to factor in a higher terminal BoE rate after data from the UK showed last week that wage inflation was strong and core consumer inflation remained sticky early summer.
Commenting on the UK inflation readings and how they could influence the BoE’s monetary policy, “the BoE will hike key rates another two times until year-end. It might have to take further action in 2024 as well,” said Commerzbank analysts.
“It would be disastrous for Sterling if, over the coming weeks, the market gets the sense that the BoE might, after all, be hesitant to combat inflation risks in order not to dampen the economy too much,” they continued.
The bosses of the UK's biggest companies have apparently been enjoying inflation-busting salary hikes of 16%
The High Pay Centre says chief executives for firms on the FTSE 100 had an average rise of around £500,000.
It found the gap between bosses and workers widened, with… pic.twitter.com/KQ2vHE3Xsg
— Go Radio (@thisisgoradio) August 22, 2023
Pound Sterling price in the last 7 days
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies in the last 7 days. Pound Sterling was the strongest against the Australian Dollar.
There won’t be any significant data releases on Monday’s US economic docket. Meanwhile, after a gloomy start to the week, US stock index futures recovered momentum and were last seen climbing between 0.25% and 0.6%. A strong start on Wall Street could make the US Dollar less attractive as a safe haven and support the GBP/USD exchange rate.
It appears the US dollar, World Bank & International Monetary Fund (IMF) have a new match. The new BRICS Bank is set to announce a new global currency to counter the US dollar dominance. Gone are the days the global south was taken for granted pic.twitter.com/3yoAB2lHIJ
— Savious-Parker Kwinika (@saviouskwinika) August 22, 2023
On Wednesday, S&P Global will release preliminary August Manufacturing and Services PMI reports for the UK and the US. More importantly, major central bankers will speak on policy outlook at the Jackson Hole Symposium that will get underway this Thursday.