Fed Speech Looms Large for British Pound Price Action
The British Pound (GBP) stabilized at around 1.3600 on Wednesday, about 0.4% lower than its session high of 1.3650. The pair had initially drifted downward in the morning European session and gave up nearly 50 pips after a block of American data was released at 12:30 GMT. Since then, the price has remained flat.
The August advance is a notable positive for the Pound, which rose from roughly 1.3300 to just short of 1.3700. The currency still sits above its 50-day Exponential Moving Average (EMA) and 200-day EMA, both of which are rising. A daily Stochastic Relative Strength Index (Stoch RSI) near 93 indicates that the move has been fully paid for.
However, it's unclear who is behind this rally, as Britain itself hasn't released any significant data to contribute to the price action. The July inflation rate was 2.9%, and the Bank of England kept interest rates at 3.75% with a 6-3 vote. Meanwhile, US Treasury decisions to double its purchases of longer-dated government debt earlier this week contributed to Dollar weakness.
Looking ahead, the only significant event on Friday is the Fed Chair's Jackson Hole keynote speech, which could influence the direction of the Pound. The speech will be closely watched as it may provide clarity on the Fed's stance and its impact on monetary policy. If the Fed Chair signals a tighter stance, this could lead to Dollar strength and potentially weaken the Pound.