GBP/USD Bounces Back as Fed Signals Readiness for Further Rate Hikes
The British Pound (GBP) has rebounded against the US Dollar (USD) in early European trading, reaching around 1.3545. This move comes after a strong upside for the Greenback on Friday, following Federal Reserve Chair Kevin Warsh's warning of upside inflation risks at the Jackson Hole Symposium.
Rabobank's Elwin de Groot notes that Warsh's speech marked a notably tougher tone on inflation and signaled readiness to keep tightening until inflation improves. De Groot argues that this formulation underscores the Fed's willingness to extend the tightening cycle if disinflation stalls, reinforcing upside risks around the policy path.
In terms of technical analysis, the GBP/USD pair holds a mildly bullish near-term bias as it consolidates directly on the 20-day exponential moving average (EMA) at 1.3543 after a corrective move. The Relative Strength Index (RSI) sits just above the neutral 50 mark, hinting at steady but not overstretched upside momentum.
Looking ahead, initial support is aligned with the 20-day EMA at 1.3543, while firmer demand is seen near the former trend-line break area around 1.3420. To reclaim the six-month high at 1.3676, the pair needs to return decisively above 1.3600.