Return of the Dollar’s Gains

The exchange rate of the British pound against the US dollar, GBP/USD, traded buoyantly above its recent lows yesterday, after entering the new week’s trading in full swing. It could have room to rise in the coming days in the absence of any turmoil from the central bank’s speeches in the United States or the outside. This is in addition to developments in the exchange policy in China. The GBP/USD pair recovered cautiously to the 1.2800 resistance level, before returning to the downward path, settling around the 1.2730 support level at the beginning of Wednesday’s session.

Overall, the pound has been one of the few currencies that has held up well against the strong dollar in recent days after an outperformance that many analysts attribute to official figures released last week indicating that British inflation fell less than expected in July and that wage packages averaged out. It rose at an accelerated pace.

Commenting on performance and influence factors. “Wage gains could be less sustainable if the recent slowdown in the labor market continues,” says Dominic Bonning, FX Analyst at HSBC. The unemployment rate rose from a session low of 3.5% to 4.2% – one of the biggest jumps in the G-10 – while layoffs continue to rise and job vacancies decline. So we have been bullish on the pound since November last year, with expectations of GBP/USD reaching as high as 1.30. He added, “After breaching this level – briefly – last month, risks are increasing that it may now represent the peak in the currency and not a more sustainable level after the end of the rainy summer.”

Overall, financial markets have re-engaged in earlier bets on a Bank of England (BoE) rate hike from 5.25% to 6% as a result, which may partly explain the recent resilience of the pound-dollar rate, but the UK’s economic calendar is thinner. This means that external events will have a greater impact on the pound sterling this week.

The release of the S&P Global Purchasing Managers Index surveys today, Wednesday, is the highlight of the economic calendar in Britain for this week, and while positive readings could help support the price of the pound against the dollar for a while, this week’s performance is likely to depend more importantly on developments. in the United States and China.

The US Federal Reserve’s annual Jackson Hole symposium for economists and central bankers kicks off on Thursday and will be closely watched for clues as to whether the Fed is likely to raise US interest rates further while also attracting attention for geopolitical reasons linked to the BRICS summit meeting. this week. The latter group aspires to create an international financial structure to compete with that supervised by the United States, and one of the main topics of this year’s symposium relates to structural shifts in the global economy, although China’s renminbi exchange rate policy may also be important for many currencies including That sterling.

• The general trend of the GBP/USD pair is still bearish.
• The return to the support area of 1.2610 confirms the strength of this trend.
• It moves the technical indicators towards strong oversold levels.

There will be no change in the direction to the upside without returning to the psychological resistance 1.3000, and this may happen if it moves towards the resistance levels 1.2850 and 1.2920, respectively.

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