GBPUSD hits a 2-month high on a soft dollar and UK political developments

The British pound has reached a two-month high against the US dollar, primarily due to the recent weakening of the US dollar. On Wednesday, the GBP/USD pair surpassed 1.3550, supported by strong positive momentum following news that incoming UK Prime Minister Andy Burnham plans to appoint Shabana Mahmood as Chancellor of the Exchequer. Mahmood is widely regarded as an advocate for a more expansionary fiscal policy.

Pound Consolidates Gains

The sterling remains the strongest currency this week. However, after the sharp advance, the pair experienced a slight pullback due to profit-taking. Over the past few hours, GBP/USD has traded within a narrow range, showing limited directional movement. At the time of writing, the pair is trading around 1.3500. The market appears calm, though underlying volatility persists. The pound showed minimal reaction to robust economic data from the UK. The Office for National Statistics reported that the UK economy grew by 0.1% in May, aligning with economists’ expectations, following a 0.1% contraction in April.

GBPUSD Technical Forecast

The overall trend continues to be bullish, supported by substantial buying pressure observed in the last session. This is highlighted by the pair's breakout above the key resistance level of 1.3500. Given the current volatility, there is potential for the pair to revisit the recent peak near 1.3550 later this week. A break and four-hour close above 1.3550 would likely trigger renewed buying interest, targeting the 1.3580 resistance zone. On the downside, sellers should watch for a move below 1.3480, which could lead to a corrective decline toward the 1.3450–1.3440 support area.



Bottom Line:

Looking ahead, market participants are focusing on upcoming US retail sales data, which is expected to show a slightly dovish tone, as well as initial jobless claims scheduled for release later today. Retail sales data serves as a key indicator of consumer spending and provides insight into inflation trends. Stronger-than-expected figures could bolster the US dollar's momentum, while softer data may support GBP/USD in revisiting recent highs near 1.3550–1.3560.

 

This marketing material is provided for informational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any financial instruments.

Trading in securities involves significant risk and may not be suitable for all investors. Prices of securities may fluctuate significantly and may result in a total loss of your investment. Investors should be aware that losses may exceed potential profits when buying and selling securities. In certain market conditions, you may sustain losses that exceed your initial investment. Securities and contracts for differences are complex financial instruments that require a high level of knowledge and understanding. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.