The GBP/USD currency pair extended its previous bullish trend with more power and took bids around closer to the 1.3300 level. However, the currency pair's bullish trend could be associated with the fresh weaker sentiment surrounding the broad-based U.S. dollar. The U.S. dollar declines were driven after the Federal Reserve (Fed) Chairman Jerome Powell's introduced a new strategy to increase employment, called Average Inflation Targeting (AIT), that indicates the tolerance for higher inflation and prolonged low-interest. This, in turn, undermined the U.S. dollar and contributed to the currency pair gains.
On the contrary, the Brexit woes signaled by the Times and noise surrounding over the coronavirus (COVID-19) reports turned out to be a major factor that capped further upside momentum for the GBP/USD currency pair. At this particular time, the GBP/USD currency pair is currently trading at 1.3272 and consolidating in the range between 1.3187 - 1.3290. Moving on, the currency pair traders seem cautious to place any strong position ahead of BOE Governor Andrew Bailey's speech at the Jackson Hole Symposium.
At the Jackson Hole symposium on Thursday, the U.S. Federal Reserve Chairman Jerome Powell announced that the Fed would target an average inflation rate of 2%, countering years of super-low inflation. As well as, the Federal Reserve (Fed) Chairman Jerome Powell's decision to offer the Average Inflation Targeting (AIT) will result in prolonged low-interest, which keeps weighing on the greenback and provided support to the major.
As in result, the broad-based U.S. dollar failed to gain any positive traction and edged lower on the day amid Federal Reserve's latest decision. Moreover, the losses in the U.S. dollar could also be associated with the downbeat U.S. job data, which showed that 1.006 million initial jobless claims were filed over the past week. This, in turn, fueled worries about the U.S. labor market recovery. However, the losses in the U.S. dollar kept the GBP/USD currency pair higher. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped by 0.20% to 92.802 by 12:24 AM ET (5:24 GMT).
Also weighing on the greenback could be the upbeat market trading sentiment, backed by the on-going optimism over a potential vaccine/treatment for the highly infectious coronavirus. Besides, the receding virus figure in most of the countries also exerted a positive impact on the market trading sentiment. Additionally, supporting the factors for the trading sentiment could be the discussions concerning the U.S. coronavirus (COVID-19) stimulus package. The U.S. House Speaker Nancy Pelosi's suggest further decreasing of the Democratic demand to around in the middle of $2.2 trillion.
At the Brexit front, the UK PM Boris Johnson was recently warned by the senior European Union (E.U.) sources that the PM Johnson would have to save post-Brexit trade and security talks within two weeks. As we all know, the final scheduled phase of post-Brexit trade discussions between the U.K. and the E.U. has already been abandoned, but the diplomats from both sides are expected to meet next week.
In the meantime, Germany's departure of Brexit talks as the plan from next week's key negotiations among the E.U. ambassadors also fueled the worries and became the key factor that capped bullish sentiment around the British Pound and kept the currency pair gains limited.
Also capping the pair's gains could be the rising number of coronavirus at home. The virus figures reported the highest daily COVID-19 cases while making 1,522 numbers for Thursday. However, the little optimism over the ingredient protecting against the coronavirus (COVID-19) and 21-day immunity plan overshadowed the intensifying virus fears, which might support the currency.
Daily Support and Resistance
S1 1.2899
S2 1.2995
S3 1.3032
Pivot Point 1.3091
R1 1.3128
R2 1.3186
R3 1.3282
The GBP/USD pair has violated the ascending triangle pattern at 1.3267 level, and above this, the pair has the potential to go after the next target level of 1.3380. The cable may find support at 1.3267 level; it's the same level that worked as resistance. In addition to 1.3380 resistance, a bullish breakout of this level can extend buying unto 1.3477 level. The RSI is also supporting the bullish bias, while the recent 4-hour candle is bullish engulfing. Let's consider taking buying trades over 1/3267 level today. Good luck!