- GBP/USD recovers to a new multi-month all-time high on Thursday amid the dollar’s selling trend.
- Powell’s dovish comments on Wednesday dragged US bond yields lower and weighed on the dollar.
- The technical setup favors the bulls and supports prospects for further gains in the short term.
The GBP/USD pair is supported by a solid overnight bounce from 1.1900, or the weekly low, and gains strong follow-through traction for the second day in a row on Thursday. The positive momentum remains unbroken throughout the early American session and lifts the pair towards 1.2200, or the highest level since August 12.
The US dollar is struggling to gain significant traction and remains depressed near a multi-month low, which in turn acts as a tailwind for GBP/USD. Fed Chairman Jerome Powell sent a clear message on Wednesday that the US central bank may soon slow the pace of its tightening as early as December. This leads to a further decline in US Treasury yields and continues to weigh on the dollar.
In addition, the generally positive tone in equity markets is seen as another factor putting downward pressure on the safe-haven dollar, benefiting the high-coefficient-of-return sterling. The supportive factors mentioned above help offset the dovish comments from Bank of England (BoE) Chief Economist Huw Pill overnight. Even the gloomy outlook for the UK economy is failing to dent the bullish sentiment surrounding the GBP/USD pair.
Spot prices move back above the technically significant 200-day SMA for the first time in 2022. This could be seen as a new trigger for bullish traders and could have already set the stage for a further appreciation move. short term. The US economic calendar includes the Personal Consumption Expenditures Price Index (the Fed’s preferred inflation gauge) and the ISM Manufacturing PMI.
These data, along with US bond yields and broader risk sentiment, will influence dollar price dynamics and give GBP/USD some momentum. Next, attention will turn to the release of the monthly US employment report, popularly known as the NFP. However, the technical setup seems tilted in favor of the bullish traders and suggests that the path of least resistance for the pair is to the upside.
Technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
