Pound Poised to Break Through Yearly Ceiling Against Dollar
The British pound has reached its yearly high against the US dollar and is poised to break through it, supported by a robust trend. The GBP/USD exchange rate closed last week at a six-month high and is currently sitting above its 21-day moving average of $1.34765 and its 50-day average of $1.33947, both of which are rising.
The market has broken through the shelf that capped it all summer, but some analysts expect a pause in the coming week as the average structure underneath the market is still realigning. However, the trend's strength is confirmed by its momentum above 70 with the signal line climbing behind it, according to the RSI.
The pair closed Friday at $1.36456 after trading as high as $1.36758, a gain of 0.11% on the day. The next key level to break through is the horizontal resistance of $1.36609, which was drawn from February's highs. CIBC Capital Markets identifies $1.3680-$1.3690 as the band above it.
Wednesday's U.S. PCE inflation report and Friday's Jackson Hole speech from Federal Reserve Chair Kevin Warsh could provide opportunities for the pound to gain further ground against the dollar. Westpac forecasts a fair value of $1.35, citing a tepid UK labor market and a Bank of England already in restrictive territory.