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GBP / USD at key levels ahead of the Fed’s Jackson Hole Symposium

The GBP / USD pair recovered strongly in the previous days from the one-month lows. A combination of factors pushed the US dollar to a one-week low, which in turn is perceived as a key factor that ensures moderate growth of the “cable”. Investors now appear convinced that the Federal Reserve will have to wait longer before lifting its stimulus amid the deteriorating situation of COVID-19 in the United States.

This, together with the generally positive tone around the stock markets, undermined the safe haven of greenbacks. Global risk sentiment has risen after China said it had stopped the spread of COVID-19 in the community, restoring confidence in the country’s growth dynamics for the rest of the year. In addition, the fact that the US Food and Drug Administration (FDA) has granted full approval for the Pfizer / BioNTech COVID-19 vaccine has further boosted investors’ appetite for riskier assets.

Momentum pushed the pair to three-day highs, although there was no strong follow-up and fell close to 1.3700. The good rise in US government bond yields helped curb any deeper losses for the US dollar and curbed the upward growth of GBP / USD, but rather sparked some sales during the Asian session today. Market participants are now looking forward to the release of US Durable Goods Orders for some significant trading opportunities later in the North American session.

However, the main focus will be on Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium later this week. Powell’s remarks will be considered for new clues about the likely timing of the Fed’s stimulus reduction. This, in turn, will play a key role in influencing the short-term price dynamics in the US dollar and will give a new impetus to the “cable”.

GBP/USD Chart:

From a technical point of view, the pair shows exhaustion after a two-day recovery from the monthly bottom. The downward trend line currently plays the role of resistance and keeps the price below it. Closing the daytime candle below the trend line would potentially lead to a new downward movement back to the monthly bottom, on the other hand, if the trend line breaks, the price would move to its next resistance 1.3800 where traders’ attention will be located.


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